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December 17 was the D-Day that the Indian online gaming community anxiously awaited. But in an anti-climactic twist, the day came without any impact on the real money gaming industry.
Let us elaborate on what happened. Finance Minister Nirmala Sitharaman virtually chaired the 48th goods and services tax (GST) Council meeting today. Unfortunately, GST on online gaming, casinos, and horse racing did not make the cut among the many topics discussed.
Revenue Secretary Sanjay Malhotra said GST on online gaming and casinos was not addressed as the Group of Ministers (GoM) report on the issue submitted its report only two days back. He added that the GoM report was not even circulated to GST Council members.
The GoM looking into taxation of online gaming, races, and casinos, headed by Meghalaya Chief Minister Conrad Sangma, had in late November proposed that the goods and services (GST) tax for all three gaming sub-sectors be set at 28%, which is the highest slab rate. This would imply a 10% hike in GST for online gaming, as online gaming platforms across the rummy, poker, and fantasy sports verticals currently pay 18% GST on the platform fees.
While there was a consensus on taxing these activities at the rate of 28%, according to sources, there were differences between the ministers on the valuation methodology of the tax. The GoM had reportedly been divided on the issue of whether GST should be only on the fees/commission charged by the gaming platforms or the entire prize pool collected in contests or tournaments.
On December 15, Sangma met with Finance Minister Sitharaman and submitted the panel’s second report. Despite delaying submission for nearly six months, the GoM had passed the buck to the GST Council, asking it to take a final call on the issue. However, handing in the report two days before the meeting was perhaps too late.
Besides passing up on discussing the GST on online gaming and casinos, some of the other key highlights of the meeting were:
For now, the fate of the real money online gaming industry hangs in the balance, at least until the 49th GST Council meeting, the details for which are yet to be released.