The chairman of the Central Board of Indirect Taxes and Customs (CBIC), Vivek Johri stated that online games where winning depends on a specific outcome will be subject to 28% GST on the total bet amount. The CBIC chief made the statement on Saturday during the press conference after the 48th GST Council meeting.
The GST Council was not able to discuss seven agendas in the meeting on Saturday and the report submitted by the Group of Ministers (GoM) regarding taxation of online games was one of them. The department is of the opinion that 28% GST is due on the full bet value placed by a player, not net of margins.
The comments made during the press conference hold significance as there is still a relevant GST evasion case in court concerning a Bengaluru-based online gaming company Gameskraft Technology Pvt Ltd which received a show cause notice from the Directorate General of GST Intelligence in September for failing to pay GST amount of Rs 21,000 crore.
According to the notice sent to Gameskraft, the company’s activities were in the realm of betting and gaming. Hence, a tax of 28%, based on Rule 31A of the CGST Rules, would be applied to the full face value of all bets.
Given that the Council has not yet made a decision on the GoM report yet, it was inquired as to what the CBIC’s stance is. In response Johri said that the department believes that 28% GST must be paid on actionable claims resulting from betting or gambling, and that the tax must be paid on the full value, not on the net margins.
The discussion on the report by GoM was not able to take place since it was submitted only two days ago and hence was not circulated to other states before the meeting. The report by GoM was submitted on December 15 by Meghalaya Chief Minister Conrad Sangma.
