GST Law Committee asks for crystal clear definition of ‘Game of Chance’ and ‘Game of Skill’ for taxation

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With so many frauds and an increase in the number of victims of online gaming for a long time, the Goods and Services Tax (GST) Law Committee wants a clear-cut definition of ‘Game of Chance’ and ‘Game of skill’ when it comes to determining the legality of an online game.

Meanwhile, it has been learned that the group of ministers (GoM) are yet to take an exact decision on the implementation of the GST rate applicable for online gaming. The Law Committee under the GST Council has suggested that before taking a final decision on taxation there needs to be a proper definition of how a classification needs to be done between the ‘game of chance’ and the ‘game of skill’.

The initiative has been taken in order to avoid confusion as well as for the prevention of multiple litigations. The committee has suggested that there is no clear definition between the game of skill and the game of chance. “The committee has suggested that there is no clear definition between the game of skill and game of chance and the GoM has to first rework the report with clear definition and classification,” a person aware of the discussion was quoted as saying.

At the same time, it has also been learned that the Ministry of Electronics and Information Technology (MeitY) has started working on the framework. Long the debate about differentiating skill-based gaming from the game of chance has been in progress and now, the committee seems to have come to a conclusion to a certain extent.

In September this year, the GoM decided to levy GST on online gaming with the game of skill being an exception to this rule. The group of ministers had assumptions to the rule that online gaming like horse racing and casinos are games of skill and not chance.
The GoM’s final decision of seeking a legal opinion was made after the online gaming companies came up with various court orders that differentiated between the games of skill and chance.