In a significant development, the Central Board of Indirect Taxes and Customs (CBIC) is poised to enforce the GST Council’s decision to impose a 28% tax on online gaming, casinos, and horse racing. This decision, which comes in the wake of recent amendments to GST laws, is set to have a substantial impact on the gaming and betting industry in India.
State Consensus Crucial for New Tax Law
The implementation of this new tax rate, as announced by CBIC Chairman Sanjay Aggarwal, hinges on securing the approval of all state Legislative Assemblies. The process involves issuing an ordinance by September 30 to enact the revised tax rate. State consensus is a critical step in finalizing this significant taxation change.
Scope of the 28% GST
The revised GST rate of 28% will encompass various aspects of the gaming and betting industry. It will apply to bets placed in online gaming platforms, the face value of chips purchased in casinos, and wagers made through bookmakers or totalizers in horse racing events. This expansion of the GST’s scope is expected to have far-reaching consequences for these sectors.
Previous Tax Rate and Industry Reaction
Many online gaming companies have already received notices instructing them to adhere to the new 28% GST rate, which marks a substantial increase from the previous 18%. The amendments facilitating this change were passed in the Lok Sabha through the Integrated Goods and Services Tax (Amendment) Bill, 2023, and the Central Goods and Services Tax (Amendment) Bill, 2023, on August 11, following a voice vote.
Government’s Firm Stance
The decision to implement the 28% GST rate was initially made during the 51st meeting of the GST Council on August 2. The online gaming industry strongly contested this decision, urging the government to reconsider. Despite industry pushback, the government has stood firm in its resolve to enact the 28% GST rate, which is scheduled to come into effect on October 1.
As the deadline for implementation approaches, the gaming, casino, and horse racing sectors are bracing for significant changes in their tax structure. This move underscores the government’s commitment to revamp taxation in these industries, potentially reshaping the landscape of online gaming and betting in India.
