Amendment to GST Act on Online Gaming to be Discussed in Parliament’s Monsoon Session

New Delhi: The central government is planning to introduce clarificatory amendments to the GST Act during the upcoming monsoon session of Parliament. These amendments aim to implement the GST Council’s decision to impose a 28% tax on online gaming, casino, and horse racing. The monsoon session will take place from July 20 to August 11, 2023.

Revenue Secretary Sanjay Malhotra expressed the government’s commitment to drafting the law, introducing it in Parliament, and seeking its passage during the monsoon session. However, the implementation of the tax will depend on state legislatures passing amendments to their respective state GST laws, which may take some time.

Malhotra clarified that the amendment is not retrospective but rather a confirmation of the view that online games for stakes, regardless of whether they involve skill or chance, should be taxable at 28% of the full face value or the payment made to the online gaming platform. Currently, online gaming companies are paying taxes at lower rates on their Gross Gaming Revenue (GGR), which is less than 5%.

The decision to impose a 28% tax on online gaming companies, horse racing, and casinos was made by the GST Council. A group of ministers had recommended various tax rates based on the face value of bets, gross gaming revenue, or platform fees. Ultimately, the GST Council opted to impose tax on the entire value without differentiation based on the nature of the games.