The GST regime in India is set to impose a 28% GST levy on online gaming, casinos, and horse racing. The amendments in the Central GST and Integrated GST legislations were passed by Parliament, allowing for the implementation of this levy from October 1, 2023. The amendment in the IGST Act also requires offshore entities providing online money gaming to register for GST in India. Failure to comply with registration and tax payment provisions may result in the blocking of access to these gaming platforms located overseas.
The Central Goods and Services Tax (Amendment) Bill defines online gaming as a game played on the internet or an electronic network. Online money gaming, on the other hand, refers to online gaming where players pay or deposit money, including virtual digital assets, in the hopes of winning money or virtual digital assets. The GST rates on online gaming and casinos vary depending on whether it is a game of skills or chance. For games of skills, such as esports and puzzles, an 18% GST is charged on the platform’s commission or on the gross gaming revenue. For games of chance, including gambling at casinos, a 28% GST is charged on the total bet value.
There has been some dispute regarding the 28% levy on actionable claims in the form of betting and gambling, with horse race clubs paying either 18% or 28% GST and casinos paying 28% GST on Gross Gaming Revenue. The GST will only be charged on the initial money spent on entering casinos and not on future bettings made through winnings from previous rounds. Casual online gaming that does not involve money or any consideration is not taxable under GST.
The online gaming industry has expressed concerns about the implications of the 28% GST levy, with companies like Mobile Premier League and Hike resorting to cost-cutting measures, including layoffs, to absorb the impact of the increase in GST rates. The legislative changes are expected to be completed by the end of the next month to ensure implementation from October 1, 2023.