Industry needs clarity on the application of GST on online gaming

At the moment, GST on online gaming 18%.

Since the Goods and Services Tax Council hasn’t set a date for its next meeting yet, the online gaming industry will have to wait longer to find out how the indirect tax will be applied to it.

Officials from the Ministry of Finance have said that for now, the current rules that tax these games as a whole will stay in place. At the moment, the gross income from online gaming is taxed at 18% GST.

At the 49th meeting of the Council, the report on online gambling, horse racing, and casinos was not discussed because the chair of the Group of Ministers (GoM) and Meghalaya chief minister Conrad Sangma could not attend because elections were going on in the area. The report is likely to be taken up in the next meeting.

But officials have said that since the GoM report didn’t come to a decision on how to tax these activities, the GST Council will have to talk about it in depth.

“Up until now, it hasn’t been on the Council’s list of things to do. It could be brought up at the next meeting, but since the GoM report didn’t reach a consensus, there will need to be a lot of talks about it because different countries have different ideas,” a source said.

It is thought that the GoM on online gaming is in favour of putting a 28% tax on online gaming, horse racing, and casinos, but there is no agreement on whether the tax should only be on the fees or on the whole amount. So, it has decided to let the GST Council make the final decision.

Experts, on the other hand, said that the industry hopes to know more soon. Abhishek Jain, a Tax Partner at KPMG, said, “A positive look at the sector and a clear definition of the scope of betting and gambling would go a long way towards ending the ongoing revenue investigations in the sector, giving this sector certainty, and helping the online gaming space in India grow.”

Abhishek A. Rastogi, the founder of Rastogi Chambers, said that it’s not clear how to value gaming services, which means there’s a high chance that taxes won’t be paid or will be paid too little.

“It will be hard to get these indirect taxes back from customers because they don’t know who they are,” he said. “An early decision could help the industry reduce the unexpected burden.”

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