28% GST to be Applicable on the Total Bet Amount on Online Games Where Winnings Depend on a Specific Outcome, Says CBIC Chief Vivek Johri 

Vivek Johri
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  • Namita Ghosh December 20, 2022
  • 2 Minutes Read

Even with the fate of the online gaming industry stuck in limbo with the GST Council deferring a decision on GST on the sector, the industry has reasons to be worried. In a press conference after the 48th Central GST Council meeting, Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Johri divulged that 28% percent GST should be levied on the total bet amount in online games where winning depends on a specific outcome.

The long-pending 48th GST Council meeting was held virtually on December 17. The Council could not discuss seven agenda items, including the second report submitted by the Group of Ministers (GoM) on online gaming, casinos, and horse racing. The GoM convenor Meghalaya CM Conrad Sangma had submitted the report two days before the GST Council meeting on December 15.

Nirmala Sitharaman and Conrad Sangma
Nirmala Sitharaman and Conrad Sangma

 

The report could not be circulated to other state ministers before the meeting, and once again, the GST Council deferred its decision on the three sectors. Finance Minister Nirmala Sitharaman said that the GoM report would be “discussed threadbare” when the GST Council takes it up for discussion.

The GST Council also sought the CBIC opinion on the matter. Giving us a sneak peek into the CBIC consensus on the issue, Johri said that the department believes that 28% GST should be levied on the total bet value by a player and not the net commission charged by the gaming operators. He said, “The gaming activity is considered gambling because the winning depends on a certain outcome.”

Johri’s statement assumes significance in light of the fact that the Directorate General of GST Intelligence (DGGI) recently issued a show-cause notice of a record ₹21,000 Crores for GST evasion on Bengaluru-based gaming firm Gameskraft, a move the company has challenged in court.

 

Centre to Come Out With Clear Dikat on Online Gaming

While the GST Council is yet to make a final decision on the GST to be applied to the three gaming sectors, the Central government has indicated that it will be coming out with a new policy for online gaming soon.

On Sunday, December 18, Union Railways, Communications, and Information Technology Minister Ashwini Vaishnaw stated that the government is formulating a proper policy or a new law to regulate online gaming. Talking about the Data Bill and Digital India Bill that is in the making, he said – “We will soon be able to develop an appropriate strategy, which may even call for a new legislation or regulation.”

Vaishnaw divulged that he had held a meeting with state IT ministers on the effects of online gaming on society. Most states expressed deep concern about the negative impact of online gaming on society, especially because it can be addictive.

Ashwini Vaishnaw
Ashwini Vaishnaw

 

Incidentally, the Minister of State (MoS) for Electronics & IT, Rajeev Chandrasekhar, in his response to questions raised in Lok Sabha, recently said, “The Government is aware of the possible risks and challenges associated with the online games, including that of violence abetting video games, addiction to it, and consequential financial loss.”

For now, one thing is clear. The GST Council will only go through the GoM recommendations on GST for the online gaming, casinos, and horse racing sectors in its next meeting at the earliest.

This is a developing story. Keep following PokerGuru for all the updates!

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