28 per cent tax on online gaming to be implemented from October 1: Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman on Wednesday said that a 28 per cent tax on online gaming will come into effect from October 1, 2023. She said that the decision to levy the stipulated tax on the full face value of bets placed on online games will be implemented from October 1 despite calls from states like Goa and Delhi. 

After the panel meeting on Wednesday, Sitharaman said that the GST Council — the highest decision-making body of the new indirect tax regime, discussed the language of amendments that will be required to enable taxing online gambling.

Panel discusses tax legislation amendments

In the last meeting, the panel had determined to collect a 28 per cent GST on the full face value of bets placed, and the meeting on Wednesday was to discuss the tax legislation amendments that would be required to execute it.

Sitharaman said Delhi’s finance minister opposed the levy of the tax on online gaming while Goa and Sikkim wanted the levy on Gross Gaming Revenue (GGR) and not on face value. She, however, said other states ranging from Karnataka to Gujarat, Maharashtra and Uttar Pradesh wanted the decision taken at the last meeting to be implemented.

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Review of tax after six months of implementation

The new levy, after required changes are made in the central and state laws, is likely to come into effect from October 1, she said. There would be a review of the levy after six months of its implementation, she added.

Briefing reporters after the 51st GST Council meeting held virtually, Sitharaman said for the purpose of GST levy, the valuation of the supply of online gaming and casinos will be done based on the amount paid at the time of entry into the game and not on what they pay in each game from winning amount.

How the valuation will be done?

“The Council recommended that valuation may be done based on the amount paid or payable or deposited with the supplier by or on behalf of the player, excluding the amount entered into games bets out of winnings of previous games and bets and not on the total value of each bet placed. Entry-level whatever they pay to get chips and not what they pay in each game,” Sitharaman said.

Giving an example, the minister said if a bet is placed for say Rs 1,000, and the player wins Rs 300, then if the player again places a bet of Rs 1,300, then GST will not be levied on the winning amount. So Goods and Services Tax (GST) will be levied at the entry level in case of online gaming and casinos.

(With PTI inputs) 

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