GST law doesn’t differentiate between games of skill and chance, all games are taxed at 28%: Finance Ministry

Published on:

The Union Ministry of Finance today said that actionable claims arising from betting and gambling including those arising from online gaming are liable to taxation at 28%. The reply came as a response to an unstarred question in Rajya Sabha by YSRCP member V. Vijaisai Reddy.

The ministry said the GST Act doesn’t differentiate between game of skill and chance and noted that cases have been filed challenging the levy of GST on online gaming. It is worth noting that Gameskraft, a leading gaming portal has challenged a INR 20,000 crore GST recovery notice calculated on full entry amount.

The Rajya Sabha was informed that the Central Government has constituted an Inter-Ministerial Task Force (IMTF) to look into all aspects of online gaming regulation while the GST Council has also constituted a Group of Ministers (GoM) on Casinos, Race Courses and  Online Gaming to examine all issues of rate and valuation in these activities.

The valuation of supplies in the casino and gaming industry has been a contentious issue ever since the introduction of GST in 2017. In many instances, the department argues that online gaming operators must discharge GST at 28% on entire face value while commission or processing charges are the only amounts they are finally entitled to. The GoM was expected to provide clarity on this aspect but failed to reach a consensus. The issue will now be discussed by the GST Council, the apex decision making body in indirect tax.

Earlier, we have reported that the inter-ministerial task force (IMTF) committee comprising of Chief Executive Officer, NITI Aayog and the Secretaries of the departments of Home Affairs, Sports, Information and Broadcasting, Revenue, Promotion of Industry and Internal Trade, Legal Affairs, Electronics and Information Technology and Consumer Affairs has submitted its report to the government in September. The report backed a central legislation while also pointing out discrepancies in the laws regarding online gambling.