GST revenue from online gaming: After the 54th GST council meeting on Monday, union finance minister Nirmala Sitharaman, stated that the Centre has recorded a 412 per cent jump in revenue from the increased tax on online gaming, according to a status report submitted to the fitment committee.
Sitharaman said, “Revenue from online gaming has increased 412 per cent reaching Rs 6,909 crore (from Rs 1,349 crores) in six months.” She also added that the revenue of casinos has increased by 30 per cent.
Online games, including skill-based and chance-based games are taxed at 28 per cent GST (Goods and Services Tax) which was announced during the 50th GST meeting in July 2023. Earlier, skill-based games were taxed at 18 per cent GST.
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The hike in GST affected the country’s gaming industry negatively and led to reduced margins and triggered workforce reductions, including layoffs, hiring freezes and in some cases, operations were shut down.
This is in addition to the tax on winnings from gaming tournaments that are either in the form of cash or gift prize. As per the income tax law, these winnings are considered as winnings from online games and taxed at 30 per cent under the category ‘Income from other sources’.
Most gaming companies have recommended an amendment of the GST valuation mechanism to a net deposit model which is also called Gross Gaming Revenue (GGR) or platform fee while some companies have recommended reducing the total withdrawals from the total deposits for GST purposes.
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The online gaming industry has been filing returns since 2017, but the GST department decided that all games involving bets played between August 2017 and 1 October 2023 would have to pay a tax of 28 per cent instead of the previous 18 per cent.
As many as 71 online gaming companies have received tax notices to pay a total of 1.12 lakh crore, with some demands surpassing their annual turnover, according to GST department’s calculations.
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