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On Tuesday, November 22, the Group of Ministers (GoM), chaired by Meghalaya Chief Minister, Conrad Sangma, had a virtual meeting to finalize their long pending report on taxation of online gaming, casinos, and horse racing. In the meeting, the panel of state finance ministers proposed that the goods and services (GST) tax be hiked by 10% to 28%, which is the highest slab rate.
Government sources said the proposal, once formally approved by the federal GST Council headed by the Union Finance Minister Nirmala Sitharaman, will bring the GST on online gaming in India on par with casinos and horse racing.
The panel, which met on Tuesday (November 22), will likely fall back on the initial report presented before the GST Council in June. This would imply a hike in tax rates for online gaming, as online gaming platforms currently pay 18% GST on platform fees alone and not on the full value, including prize money.
The online gaming industry grew exponentially during the Covid-19 pandemic. Online gaming currently contributes more than ₹2,200 Crores of GST, as per a recent study by EY and Assocham. As per a KPMG report, the online gaming sector will grow to ₹29,000 Crores by 2024-25 from ₹13,600 Crores in 2020-21.
While most states in the GoM agreed on implementing the 28% tax, they differ on the valuation mechanism. While West Bengal and Uttar Pradesh support taxing the total value, Goa has recommended a tax on the entry point for casinos.
The views of all states will be incorporated in the final version of the report, which will be presented before the Council in its next meeting. The GST Council has yet to meet since September. State finance ministers will meet Union Finance Minister on Friday, November 25, for pre-Budget discussions, where GST-related issues are likely to arise.
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