The Centre will likely issue an ordinance to give effect to the Goods and Services Tax (GST) Council’s decision to impose a uniform 28% tax on online money gaming, casinos and horse racing on the full face value of the entry-level bets, without making any distinction between games of skill and chance.
To enforce the Council decision on the tax rate and related amendments such as enforcement of the tax on offshore gaming firms, the Centre may bring amendments to the Central GST Act in Lok Sabha on Friday, the last day of sitting of the ongoing Monsoon Session of Parliament.
In view of the debate on no-confidence motion, there won’t be any legislative business on Wednesday and Thursday.
So due to the paucity of time, the matter is unlikely be taken up in the Rajya Sabha even if it is approved by the Lok Sabha on Friday itself, sources told FE. Given this scenario, the law may be amended via the Ordinance route for now, with parliamentary assent to be obtained in the Winter Session.
Meanwhile, the Union Cabinet will likely approve the amendments to the GST law on Wednesday. The changes in the law will come into force from October 1. However, states will also have to pass the amendments in their respective GST laws in their assemblies to pave the way for the introduction of GST changes in the law by October 1.
On July 11, the Council decided to impose GST at 28% on online gaming, the highest slab, a move that rattled the industry. Following representation from the industry, the Council in its August 2 meeting decided to exempt redeployment of the winnings from online gaming from the 28% tax, in a significant relaxation for the fast-growing industry.
Thus, the tax will apply on the total bet placed at entry level, for each gaming session, but not on each round of betting on the gains redeployed, according to the rules finalised by the council via video conferencing.
Casinos are currently paying 28% GST on Gross Gaming Revenue (or only platform fees). The online gaming industry supplying actionable claims and some horse race clubs are currently paying GST at 18% on platform fees/commissions ranging from 5% to 20% of the full-face value while some horse race clubs are paying 28% on the full-face value.
In FY23, the Centre collected Rs 1,700 crore GST from online gaming, Rs 300 crore from casinos and Rs 80 crore from horse racing activities. In other words, GST receipts from the burgeoning online gaming industry fetched barely 2% of its estimated turnover of Rs 85,000 crore in FY23, something which officials said was not justifiable. Another key rule approved by the Council is that foreign online gaming companies will have to register themselves with the GST authorities and pay the tax to offer their services to Indian gamers. Non-compliant firms will be blocked from providing the services. These provisions will be included in the law via an amendment to the Integrated GST Act, 2017.