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Parliament passes GST amendment bills to levy 28% tax on online gaming, casinos, horse racing
Amendments to the IGST and CGST Acts for online gaming, casinos and horse racing were considered and passed by voice vote without any discussion in both the houses of the Parliament today. The matter will now move ahead into further
approval procedure, and if passed, the amendments will become part of the Acts after notification in the official gazette by the Central Government and are likely to take effect from October 1. The Bills aim to provide complete clarity
regarding taxability of actionable claims on online gaming, casinos and horse racing as the GST Council during its 50th and 51st meetings decided to levy 28% tax rate on the aforementioned activities on full face value. It will also insert a new provision, section 14A in
the IGST Act, to include the registration of online money gaming services provided by a person outside of India to a person living in the country to make them liable to pay tax. In case they do not, the section also includes the option to block them. Another clause will also be added in section 24 of
the CGST Act to make registration mandatory for a person offering online money gaming from outside of country to a person in India. The Bills were presented by Finance Minister
Nirmala Sitharaman on the last day of the monsoon session of Parliament. After the 51st GST Council
meeting she also announced that the Council will observe the effects of these changes and review them after six months of implementation. As reported previously, the states may choose to
go by the Ordinance route to bring into effect the new GST policy as soon as possible.
28% GST on online gaming, casinos, horse racing will result in revenue growth: Nirmala Sitharaman
Finance Minister Nirmala Sitharaman stated today that the 28% GST on full face value on online gaming, casinos and horse racing will lead to higher revenue. The Finance Minister was replying to a host of questions asked in the Rajya Sabha by Retired Lt. General and BJP member D.P. Vats relating to GST levy on the above three supplies. To begin with, Vats asked about the current size
Nirmala Sitharaman
and market value of the online gaming industry in India. Sitharaman revealed that according to NITI Aayog estimates the sector reached $1.9 billion in 2021, growing by 28%. Talking about the projected revenue collection
that the government is aiming to achieve by imposing the 28% GST rate on the aforementioned three supplies, the Finance Minister revealed that the casinos are currently paying 28% GST on gross gaming revenue (GGR) while the online gaming industry and some horse race clubs are paying 18% GST on platform fees/ commission which is charged in the range of 5% to 20% of full face value. On the other hand, other horse race clubs, the FM
said, were paying GST at 28% on full face value. Sitharaman also said that online gaming companies and some horse race clubs were disputing the 28% rate levy. She added that the new rate will result in
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higher revenue collection from current levels. Vats, lastly, asked if there was any specific
reasoning behind imposing the 28% rate and its potential impact on the growth and revenue generation of the three sectors. The FM replied that the GST rate and exemption
are decided based on the recommendations of the GST Council which consists of members from central and state/UT governments who together recommended 28% GST on actionable claims in the form of betting and gambling. Sitharaman added that a Group of Ministers
was formed by the Council which held elaborate stakeholder consultations and examined the impact on the aforementioned sectors, submitting its report recommending a 28% rate. Based on the recommendation, the GST Council, in its 50th meeting on July 11, decided upon the 28% rate on full face value.
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