GST Council to meet this month, may decide on taxation of casinos, online gaming and horse racing

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The 49th meeting of the GST Council chaired by Union Finance Minister is scheduled to be held in New Delhi on February 18, 2023.

The meeting is likely to deliberate on the issue of GST levy on online gaming, casino, and horse racing. The matter was taken up in the last meeting in December 2022 held through online mode but a decision was not arrived at as even the GST GOM could not arrive at a consensus.

In June, the GoM has recommended that online gaming should be taxed at the full value of the consideration, including the contest entry fee paid by the player on participating in the game on par with casinos. Later, the GST Council based on requests from Goa mandated the GoM to provide a revised report by the end of July which got extended multiple times. The revised  report was submitted in December, a few days before the 48th GST Council meeting.

In the budget announcement for 2023, the Finance Minister announced changes to taxation of winnings from gaming and gambling. For online games, it is proposed to provide for TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year. This TDS requirement is without any lower applicability threshold and any net winnings from online gaming howsoever small will be subject to 30% TDS deduction.

The GST Council may now take up taxation and valuation aspects under the indirect tax law which may led to conclusion of the long pending ambiguity in tax laws as applicable to gaming and gambling in the country. The lacunae, industry experts say has impacted the growth of the nascent gaming sector which is dubbed as a sunrise sector.