DNA Explainer: Online gaming, casino, horse racing to fall under 28% GST? What it means

The GST Council and Ministry of Finance, which constituted a Group of Ministers (GoM), to determine the GST rate and taxation on casinos, race courses and online gaming will have a crucial meeting today under Meghalaya Chief Minister Conrad Sangma. The GoM will determine whether to deliberate a blanket 28% goods and services tax (GST) on online gaming.

The GoM may also decide on clubbing these into one category during the crucial meeting. The group will discuss the ambiguities in valuation of services and their taxability. At present, the entire transaction value, which includes the winning amount attracts GST.

Read | DNA Special: Online gaming to be taxed?

The Indian online gaming industry has been flourishing in the past few years with the emergence of new startups. This has witnessed a considerable amount of positive economic impact. With Digital India initiative by Prime Minister Narendra Modi, internet access to citizens at affordable rates and penetration of the use of mobiles across social and demographic barriers has seen a boost.

This in return has given a boost to the use of social media and the use of online gaming platforms. However, the online gaming industry awaits a clear judgment by the government on GST restructuring and rate rationalisations on the online games. 

Chaired a meeting of the Group of Ministers (GoM) on casinos, race courses & online gaming. Thank all the Hon’ble Members for their submissions and their views. We look forward to finalising our discussions and submit our report soon. @nsitharaman @GST_Council @FinMinIndia pic.twitter.com/pFE8GtvgHZ

— Conrad Sangma (@SangmaConrad) May 2, 2022

What is expected from the meeting

According to sources, there is a possibility that the Group of Ministers will discuss on whether GST should be implemented on the entire transaction amount, which includes prize money and net commission taken by the gaming companies.

The group, while making assessment on the taxability of the services, can discuss on the better rules and regulations being implemented worldwide on this matter. After this, the Group of Ministers will send their recommendations to the GST Council. 

The GST Council last year had formed the seven-member Group of Ministers to examine the valuation of services provided by casinos, race courses and online gaming websites, along with taxability of certain transactions in a casino. This year in February the group was even restructured.

This meeting is crucial because till now the tax officials, instead of taking only commission or processing fee are taxing the entire amount that is been put at stake, resulting in taxation on online gaming becoming problematic.

Despite all the uncertainties, The government has done record GST collection for the month of April from online gaming. Last month, the government earned Rs 1,67,540 crores from GST collection. This in comparison to the previous month's collection is Rs 25,445 crore or 17.91% higher. 

In March also, there was a record GST collection of Rs 1,42,095 crores. This was the first time that the data reached somewhere near the Rs 1.5 lakh crore.

For the month of April, the government earned Rs 33,159 crore from CGST, Rs 41,793 crore from SGST, Rs 81,939 crore from IGST and Rs 10,649 crore from cess as part of the GST collection. Rs 36,705 crore in IGST and Rs 857 crore in cess was collected through import of goods. Finance Ministry gave this information on Sunday.