The Union Cabinet on Wednesday approved amendments to the C-GST Act and IGST Act, paving the way for introducing a Bill in Parliament in this regard to levy 28% GST on online money gaming, casinos and horse racing on the full-face value of the entry-level bets, sources said.
The amendments, which are slated to come into force on October 1, also have provisions for enforcement of the tax on offshore gaming firms.
Given the paucity of time due to the debate on the no-confidence motion against the government in Lok Sabha, the Centre will likely issue an Ordinance to give effect to the Goods and Services Tax (GST) Council’s decisions on treating online money gaming, casino and horse racing as actionable claims and tax at 28%.
States will also have to pass 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.
The Centre may bring amendments to the Central GST/IGST Acts in Lok Sabha on Friday, the last day of sitting of the ongoing Monsoon Session of Parliament. However, there will be no time to send the Bill to the Rajya Sabha for approval during the current session. The next Parliament session will commence in late November.
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.