Skill gaming may be taxed at 28% at par with chance gaming such as racing, betting and lotteries, says EY India. Lack of recognition of cryptos as currency could result in GST levy on them as ‘goods’.
Online gaming: Online gaming is now taxed at 18% of the platform fee, which works out to 5-20% of the contest entry amount. But chance gaming such as racing, betting and lotteries is taxed at 28% of the contest entry amount. A group of ministers has recommended doing away with the distinction between skill gaming and chance gaming. This means even the skill gaming will also be taxed at 28%. Bipin Sapra, tax partner at EY India, said games like online rummy, poker, fantasy sports, and e-sports have been held to be games of skill by various high courts and the Supreme Court and are, thus, distinguished from gambling. “By increasing the tax rate, it is anticipated that a parallel unauthorised and unregulated market may emerge,” he added.
Virtual Digital Assets: The GST law currently does not recognise virtual digital assets (VDAs) as a concept, leading to multiple interpretations and risks of litigation. For instance, cryptos can be argued to be a currency, and therefore, not liable to tax, said Divyesh Lapsiwala, tax partner at EY India. However, lack of recognition means they could be regarded as “goods”, triggering GST, he added. As transactions in VDAs happen seamlessly across the globe, the question of the place of supply (which depends on whether the supply is goods or services) is critical. The joint taxing power between states and the Centre–coupled with the virtual presence of users, platforms, and intermediaries–add to the complexities, Lapsiwala said. As for the direct tax, the Budget for FY23 proposed to tax gains on the sale of private crypto assets at 30%.