New Delhi: Finance minister Narmada Sitharaman on Tuesday said the 28 percent GST on full face value of supplies in casinos, racecourses and online gaming will result in higher revenues.
The online gaming segment grew by 28 percent in 2021 to reach USD 1.9 billion, as per NIT IA agog estimates referred in the Draft National Policy for Growth of Animation, Visual Effects, Gaming, Comic & Extended Reality sector in India prepared by the Information and Broadcasting Ministry. Finance minister Narmada Starman on Tuesday said the 28 percent GST on full face value of supplies in casinos, racecourses and online gaming will result in higher revenues the online gaming segment grew by 28 percent in 2021 to reach USD 1.9 billion, as per NIT IA agog estimates referred in the Draft National Policy for Growth of Animation, Visual Effects, Gaming, Comic & Extended Reality sector in India prepared by the Information and Broadcasting Ministry In a written reply to a question in the Raja Sakha, Starman said casinos are currently paying 28 percent GST on Gross Gaming Revenue (GGR). Online gaming industry supplying actionable claims and some horse race clubs are currently paying GST at the rate of 18 percent on platform fees/commission ranging from 5 to 20 percent of the full face value, while some horse race clubs are paying 28 percent on the full face value. Starman said online gaming companies supplying actionable claims and some horse race clubs paying 18 percent on platform fee/commission are disputing the 28 percent levy on actionable claims in the form of betting and gambling before various legal FCRA It is anticipated that the levy of 28 percent on full face value, as recommended in the 50th GST Council meeting, will result in increase of revenue from current levels, Starman added. The new tax levy is now expected to be effective from October 1. A review would be undertaken after six months of the implementation, Sitharaman, who heads the Council. The 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 all bets placed… (GST will be on) entry (level) whatever they pay to get chips and not what they pay in each game, citing remarks shared by the Meghalaya Chief Minister at the Council meeting, she also pointed out that the prevailing practice is of 18 percent GST on gross gaming revenue or platform fee, which results in net revenue of only 8-9 percent.
Assuming today’s 18 percent on GGR becomes 28 percent on GGR, we will be collecting only around 11-12 percent… at the current collections, it is far lesser than the tax we levy on some of the essential goods for households. This is gaming, you are wagering on it, giving an example, she said if a bet is placed for say Rs 1,000, and the player wins Rs 300, and if the player again places a bet of Rs 1,300, then GST will not be levied on the winning amount of Rs 300.
Officials would now work on the legal amendments, which are expected to be taken up in the ongoing monsoon session of Parliament, following which states will also pass respective amendments in the state GST laws.
When the question of when to implement it came, October 1 is when it is expected, by which time the states will also pass the amendments to their state laws… because of the casinos, Goa and Sikkim kept appealing saying that they are small states and need to be given some consideration… The Council agreed today to come back after six months to review the way in which this is getting implemented. When I say six months, it’s not six months from today but six months from when this gets implemented, Starman said.
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