Online games where winning is dependent on a certain outcome would attract 28% GST on the full bet value, Central Board of Excise and Customs chief Vivek Johri said on Saturday, even as the report of a group of ministers on the contentious issue is still awaited by the GST Council.
“The view of the department on levying GST on online gaming is very clear. GST at the rate of 28% is payable on actionable claims arising out of betting and gambling. The tax is payable on the full winning value and not net of margin,” Johri said, when asked what the stance of the CBIC would be on these firms.
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The GoM report on online gaming, horse racing and casinos was not discussed at the GST Council on its meeting on Saturday. “It is betting and gambling as the winning certainty is dependent on a certain outcome,” he said.
The Directorate General of GST Intelligence had in September this year issued a show-cause notice to Karnataka-based online gaming platform Gameskraft for not paying GST of Rs
21,000 crore. The case is pending in court. The CBIC is also investigating gaming companies, including online gaming firms, the estimated evasion of GST by these companies works out of Rs 22,936 crore, relating to period April 2019 to November 2022.
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Revenue secretary Sanjay Malhotra had said the report of the Group of Ministers chaired by Meghalaya chief minister Conrad Sangma was received only a “couple of days ago” and was not part of the agenda of the 48th meeting of the GST Council. “Members would not have had time to read it. The report was not circulated,” Malhotra said.
The GoM on online gaming is understood to be in favour of levying 28% tax on online gaming, horse racing and casinos but there is no consensus on whether tax should be only on the fees or the entire amount under consideration. Accordingly, the GoM had decided to refer its recommendations to the GST Council for a final decision.
Union finance minister Nirmala Sitharaman, who chairs the council, said the GoM report would be “discussed threadbare” when the council takes it up for discussion.