Parliament passes GST amendments; no tax on casual online gaming

The Parliament, on Friday, cleared the amendments to Central and Integrated Goods and Service Tax Laws to enable charging of 28% GST on online money gaming, betting, gambling and horse racing. The GST will be charged on the full face value of bets made in these activities.

Given that the decision by the GST Council has attracted a lot of criticism from stakeholders and investors, officials were at pains to explain that the provisions would not be misused in any way whatsoever.

“The amendments do not affect the tax on casual online gaming in which no real money or betting or wager is involved. There's no effect of the amendments on the start-up ecosystem in India, as it brings a parity between international entities & domestic ones,” a senior union Finance Ministry official told DH.

The official said that the amended GST laws seek to establish a robust legal framework to avoid legal ambiguities and also to address various concerns of stakeholders and that the decision will aid in combating money laundering, illegal income, black money and other illegal activities associated with online gaming.

Of concern to the authorities have been offshore entities who are based out of India but still generate revenues from online money gaming. Registration under GST is being made mandatory for a person supplying online money gaming, from a place outside India to a person in India.

“While making its recommendations, the GST Council duly considered the negative impact of online money gaming on society and the youth in particular,” the person said, adding that the amendments make it clear that the activity of online money gaming will be taxed on the total amount paid irrespective of whether the game is based on skill or chance or both. 

The amendments to the Integrated GST laws have a special provision to provide for tax liability on overseas suppliers of online money gaming, the provisions for simplified GST registration for such suppliers as well as powers for blocking websites/platforms of non-compliant suppliers.

“This is intended to allay the concerns of domestic online gaming industry that these amendments in relation to online money gaming may lead to shifting of such online money gaming to platforms outside India,” the official said.