New tax regime: Govt sees six fold jump in GST collections from online money gaming companies post 1 October 2023

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Union Revenue Secretary Sanjay Malhotra in a post budget interview to CNBC TV 18 today said online money gaming platforms are paying Rs. 1200 crores per month GST on an average from 1st October, 2023 since the new GST regime of 28% on deposits was introduced compared to Rs. 200 crores per month on an average that they were paying before the new regime came in (18% on platform fees).

The revenue secretary expressed satisfaction on the new regime and the revenue potential was untapped until the new regime.

While addressing concerns about the retrospective or prospective nature of these changes, Malhotra said that the adjustments were prospective and that the  retrospective aspect is in the courts.

The comments from the top bureaucrat appears  to be contrary to recent comments by Additional Solicitor General N. Venkatraman in a hearing before the Supreme Court. The top law officer said that the new 28% GST on initial deposits is not generating desired revenue for the government and that govt may review the decision. Government in 2023 said it would review the status six months from implementation i.e., in April 2024. 

The GST Council in its meetings in July and August 2023 had decided to recommend the levy of 28% GST on full face value of bets placed through money gaming platforms and horse racing and casinos which came into effect on 1 October.

The revenue department had claimed that changes are only clarificatory in nature and the online money gaming platforms facilitated betting and gambling by allowing games to be played for stakes and that placing stakes even on skill based games amounts to ‘gambling and betting’ under GST laws and had issued notices to several gaming companies including Gameskraft. The money gaming companies claim that the interpretation of the department would cause hardship to the gaming company as the amount runs several times more than its overall profits. The matter is scheduled to be heard on 2 April 2024.