GST Council to meet this month, online gaming industry awaits tax clarity

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The Goods and Services Tax (GST) Council is likely to meet in the third or fourth week of June after the earlier meeting in February 2023.

For the past two meetings – in December 2022 and February 2023, the gaming industry expected the GST Council to take up the discussion on taxing online gaming, casinos, and horse racing.

A panel of state ministers (GoM) set up to examine the taxation issue had agreed on a 28 per cent GST on online gaming. However, in the absence of a consensus on whether the tax should be levied on only the fees charged by the portal or the entire consideration, including the wager amount received from the players, the panel decided to refer all suggestions to the GST Council in December 2022 for a final decision. The 48th GST Council in December did not take up the matter.

The report was then planned to be discussed in the 49th GST council meeting in February but was delayed after Meghalaya’s Chief Minister Conrad Sangma who headed the GoM was not able to attend due to elections in Meghalaya. West Bengal and Uttar Pradesh in the GoM backed GST on full value of gaming amount at 28%.

The gaming industry has highly favoured the rate for the 28% GST on Gross Gaming Revenue which is considered the best way to ensure proper growth of the online gaming sector. As of now online skill-based games are taxed at a rate of 18% while games of chance are taxed at the rate of 28%.

But the reports indicate that even in the June meeting the issue may not be taken up as states and union are indecisive on it making the gaming companies continue operations in uncertainty. The Council is scheduled to take up discussion on GST Tribunals to be set up under the GST Act.

Providing clarity on direct tax front, the finance ministry recently introduced a new tax deducted at source (TDS) requirement for online gaming from 1 April.