28% GST on online gaming cabinet approves

28% GST on online gaming cabinet approves: According to the source, the Union cabinet approved the legislative changes required to carry out the GST Council’s decision to ensure that 28% GST is paid on the full value of amounts deposited by players for wagering on online games, casinos, and horse races.

The government is now free to introduce amendments to the Central GST laws in Parliament during the current session, which is open until 11th August. To enable SGST law amendments to be approved in time for the new taxation to take effect on October 1st, even state governments and two Union territories with Assemblies must do this.

Read Also: 51st GST Council Meeting Highlights: 28% tax on online gaming

The GST Council decided at its 51st GST Council meeting that every effort would be made to finish the Act’s amendment process as soon as possible so that the modifications would take effect on October 1st, 2023. This is only possible if the Centre amends the CGST, IGST, and UT GST laws and the states make equivalent changes to their SGST Acts. This includes the amendment to Schedule III of the CGST Act, 2017.

The GST Council approved the legislative changes required at the federal and state levels on August 2 in order to guarantee that these industries pay 28% tax on the total value of wagers. The Council also decided to review the new system six months after it was put into effect and to exempt any winnings that were redistributed from indirect taxation.

Read Also: GST Council Meeting: On 2nd Aug over issue of online gaming

The council also decided to mandate the registration of offshore gaming sites that cater to Indian players and to charge GST to them during the meeting. Additionally, any offshore online casinos that do not adhere to this rule will be blocked.

The levy of 28% GST on the full face value of bets, as recommended by the 50th GST Council meeting, is expected to increase revenue from current levels, according to the finance minister Nirmala Sitharaman in a written response to a Rajya Sabha question. Online gaming revenue is predicted by Niti Aayog to increase by 28% to $1.9 billion in 2021.

Read Also: Weekly Goods and Service Tax latest News – August 2023

While the proposed law changes will bring clarity on the taxation of online gaming, casinos and horse racing, the Supreme Court will have the final word on tax demands raised so far under existing law. The central government has also filed a special leave petition in the Supreme Court challenging a Karnataka high court order that gave a favourable ruling to the industry in a dispute with Gameskraft Technologies Pvt. Ltd.

The council chose to impose GST on the full amount of deposits rather than acceding to demands from the online gaming industry to only levy it on their margins, or gross gaming revenues (GGR).

Read Also: Mismatch in GSTR-1& GSTR-3B: GST department started recovery

The reworked levy on online gaming, casinos and horse racing is also expected to step up revenues of both the Centre and the states. Revenue secretary Sanjay Malhotra had earlier said that last year (2022-23), the exchequer collected only Rs1,700 crore as GST from the segments, and this could have been Rs 15,000 crore-Rs 20,000 crore had the tax been levied on the full value.

Mobile Premier League (MPL), a prominent player in the industry, was on the verge of releasing 350 employees, constituting half of its total workforce. The driving force behind this step was the recent enactment of a new 28% GST rate by the government, applicable to revenue derived from online gaming. The revised GST rules will place a higher tax burden on the company, ultimately steering the decision towards implementing the layoffs.