28% GST On Online Gaming From 1 October 2023

In a move to regulate online gaming, Sanjay Agarwal, Chairman of the Central Board of Indirect Taxes and Customs (CBIC), has announced that India will implement a 28% Goods and Services Tax (GST) rate on online gaming starting from October 1, regardless of whether these activities involve games of skill or chance, as reported by The New Indian Express.

Following recent amendments to GST laws passed in the Lok Sabha on August 11, during its final session of the monsoon season, the government plans to tax online gaming as part of broader efforts to bring various sectors under the GST framework and streamline tax collections. The two GST laws were passed with a voice vote and minimal debate.

CBIC Chairman Sanjay Agarwal stated, “We are prepared to implement a 28% GST rate on online gaming from October 1 with the consent of all the states. The law regarding the GST rate on online gaming will need to be passed by the state assemblies. Show cause notices to some online gaming companies are part of the legal process.”

These amendments pertain to the Integrated Goods and Services Tax (Amendment) Bill, 2023, and the Central Goods and Services Tax (Amendment) Bill, 2023, which will impose a 28% GST for online gaming, casinos, and horse racing. This move aims to provide much-needed clarity regarding the taxation of supplies in casinos, horse racing, and online gaming, as asserted by the central government. During the 50th meeting of the GST Council on July 11, a 28% GST rate was recommended for the full face value of Casinos, Horse Racing, and Online Gaming.

To ensure strict compliance, the GST Council has recommended specific provisions in the IGST Act, 2017. This will establish the liability to pay GST on the supply of online money gaming from foreign suppliers to Indian customers, along with measures for blocking access to any related information in case of non-compliance.

It’s worth noting that almost all online gaming companies that have experienced growth in recent years are based offshore. Furthermore, it is concerning that prominent athletes and actors are promoting online gambling, which can have a serious impact on young people.

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