28% GST on Online Gaming: Finance Minister to table CGST & IGST Amendment Bill before Lok Sabha Today

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Today, the proposed changes to the Central Goods and Services Tax Act (CGST Act), 2017, and the Integrated Goods and Services Tax (IGST Act), 2017, regarding the imposition of 28% GST on online gaming, casinos and horse racing will be presented in the Lok Sabha by the Union Finance Minister, Nirmala Sitharaman. The Bills received approval from the Cabinet on Wednesday. All the bills will be presented this afternoon today.

The 51st GST Council proposed certain amendments to both acts regarding the tax rates of casinos, online gaming and horse racing including amendment in Schedule III of CGST Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing and online gaming.

The council has decided to impose 28% GST on face value. The Finance Minister and the Secretary have informed that the amendments will be implemented from October 1, 2023. However, the same will be reviewed after the 6 months’ implementation.

The gaming industries and worrying about the GST rate. Sudipta Bhattacharjee, Partner, Khaitan & Co., representing the Gameskraft in the legal dispute of Rs. 21,000 crores GST demand said to Taxscan that “Investors in this sector may continue to be concerned given the ‘blow hot, blow cold’ approach towards online gaming as a sector where on the one hand, the sector is lauded and encouraged through ‘light touch’ regulations by the MeITY and on the other hand punitive taxation is reaffirmed to be imposed under GST (despite several pleas from the sector) by levying the same level of GST as ‘betting and gambling’ on online games of skill, ignoring decades of settled legal position that games of skill cannot be equated with gambling.”

Difficulties are bound to arise when introducing novel initiatives. The industry finds solace in the fact that the government is willing to meticulously evaluate the circumstances after the initial half-year of implementation.

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