Explained: What are the GST Council's tax recommendations for online gaming?

The GST Council in the 50th meeting held on July 11, 2023, had deliberated on the Second Report of the Group of Ministers (GoM) on casinos, race courses and online gaming and had recommended that the actionable claims supplied in casinos, horse racing and online gaming may be taxed at the rate of 28 percent on full face value, irrespective of whether the activities are a game of skill or chance.

Stakeholders appealed to the government for reconsideration. The 51st GST Council meeting on August 2 provided clarity and settled all uncertainties.

Here are the key takeaways from the meeting:

Taxation on Casinos and Online Gaming: The Council recommended a 28 percent GST levy on full face value for actionable claims in casinos, horse racing, and online gaming, irrespective of whether they involve skill or chance.

Liability for Offshore Gaming Companies: A specific provision in the IGST Act was proposed to make offshore gaming companies located outside India liable to pay GST when supplying online money gaming facilities to individuals in India.

Valuation of Online Gaming: The valuation of online gaming and actionable claims in casinos will be based on the amount paid or deposited by players, excluding the amount entered into games/bets from previous winnings.

Simplified Registration Scheme: Offshore gaming companies will need to register in India under a simplified registration scheme. Failure to comply with registration and tax payment provisions may result in access blocking.

Effective Date: The Council aims to complete the amendment process at the earliest, and the changes are expected to come into effect from October 1, 2023.