- The GST Council has decided to levy a 28 percent tax on online gaming, casinos and horse racing.
- The tax levied doesn’t differentiate between games based on skills and chance.
- This decision is expected to affect the Indian online gaming industry negatively.
The Goods and Services Tax (GST) Council has imposed a 28 percent tax on online gaming, casinos and horse racing. The announcement was made by Union Finance Minister Nirmala Sitharaman at the 50th GST Council meeting. The 28 percent tax on online gaming applies to games of both skill and chance.
The GST Council came to the decision of taxing online gaming, casinos and horse racing after much deliberation. A Group of Ministers (GoM) who were assigned to look into the issues related to this taxation, submitted the first report in June last year. The report was prepared and placed before the 47th GST Council meeting but the GoM was asked to look at it again. Another report was submitted before the 50th GST Council meeting but the GoM could not reach a consensus on whether a 28 percent tax should be levied on online gaming, horse racing and casinos.
At the 50th GST Council meeting, it was decided to include online gaming and horse racing to be included in schedule III as taxable actionable claims. When it comes to online gaming, the 28 percent tax will be applicable on the full value of the bets placed.
Govt faces flak
The government has been receiving flak after its decision to tax online gaming among others. Ashneer Grover, BharatPe founder, has been quite vocal about the recent decision saying that the fantasy gaming industry has been “murdered” now.
Online fantasy gaming is very popular in India especially the sports sector with games like Dream11, Games24x7 and Mobile Premiere League (MPL). The Indian fantasy sports sector has also been witnessing a steady growth of 31 percent in FY22, and it’s predicted to reach Rs 25,240 crore by FY27.
Joy Bhattacharjya, the Director General of the Federation of Indian Fantasy Sports, also shared his disappointment in the decision to tax online gaming. In an interview with CNBC-TV18, he said, “28% GST on online gaming will push consumers into the hands of illegal players.” He added that since the online gaming industry has mostly startups they won’t survive 28 percent GST. Another concern is how consumers will now move to illegal betting platforms.
