GST Council likely to clarify definition of online gaming in August 2 meeting

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The upcoming GST Council meeting on August 2 is expected to clarify the definition of ‘online gaming’ and define ‘online money gaming’ as well. Along with that, the Council is going to deliberate on the manner of taxation, whether the tax will be levied on the initial deposit or on every contest entry amount.

According to the agenda, the GST Council may also include betting, casinos, gambling, horse racing, lottery and online real money gaming under ‘specified actionable claim’. Furthermore, there is also a proposal to add a new provision for inserting the definition of virtual digital assets.

A person speaking with CNBC-TV18 shared how they thought online gaming and online money gaming will be defined. According to them online gaming will be “an offering of a game on the internet or an electronic network and includes online money gaming”, while online money gaming will include “games where players pay or deposit money or money’s worth, including virtual digital assets, in the expectation of winning money is real money gaming”.

The agenda also includes a likely deliberation on levying of GST on “total amount paid to or deposited with the supplier by way of money or money’s worth, including virtual digital assets, by or on behalf of the player” for online gaming.

In case of casinos, the Council is likely to deliberate whether to levy GST on “total amount paid by or on behalf of the player for purchase of the tokens, chips, coins or tickets”.

The initial decision to levy 28% GST on full face value was taken on July 11 which was not very well received by the online gaming industry. The companies sought clarification on how the tax will be levied.

So far, the GST Council has clarified that the tax is only applicable for online real money games, casinos and horse racing. Meanwhile, the upcoming meeting aims to address all the uncertainties and make formal announcements with respect to them.