The Goods and Service Tax (GST) Council on Wednesday deferred a decision on the proposal to raise the GST on online gaming from 18% to 28% on the skill gaming to bring it at par with chance games involving gambling and betting, Karnataka chief minister BS Bommai said.
”The decision on online gaming has been deferred. There were issues which needs to be discussed. The GoM on online gaming has been given another 15 days,” Bommai said.The tax incidence was seen increasing on online gaming substantially as the GST was proposed to be levied on on the full contest entry amount (CEA) instead of the platform fee as it is in the present scenario. Online gaming is a Rs 30,000 crore industry and growing rapidly in India.
The group of ministers (GoM) had recommended that in case of online gaming, the activities will be taxed at 28% on the full value of the consideration, by whatever name such consideration may be called including contest entry fee, paid by the player for participation in such games without making a distinction such as games of skill or chance etc.
In case of Race Courses, GST will continue to be levied at the rate of 28% on the full value of bets pooled in the totalisator and placed with the bookmakers.
In case of casinos, GST be applied at the rate of 28% on full face value of the chips/coins purchased from casino by a player. In case of casinos, once GST is levied on purchase of chips/coins (on face value), no further GST to apply on the 28% value of bets placed in each round of betting including those played with winnings of previous rounds, the GoM had said.
”Such a step (increase in tax rate on a higher base) is not only in dissonance with international best practices but is also violative of the principles of GST. Essentially, the online skill gaming operators are platforms, which bring players from various geographies together. The money pooled is eventually distributed to the winning player. The platform charges a predetermined fee, known as GGR, and pays tax on that. If you were to charge an increased tax rate on the entire quantum (pooled money plus commission), it is not only principally incorrect but will also annihilate this sunrise sector,” said Sameer Barde, CEO of E-Gaming Federation.