Online games amount to betting, should pay 28% GST on full value: CBIC chief

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Central Board of Indirect Taxes (CBIC) chairman Vivek Johri on Monday said online games characterise gambling or betting and companies are liable to pay GST on the full value at 28 percent, reported CNBC TV18. He said the department has taken this view in the ongoing cases and will wait for the decision of GST Council.

These comments are of significant importance as they provide insight into the department’s view at a time the GST Council is about to decide the long-standing issue. The 49th GST Council meeting is scheduled this month.

Earlier, in a press briefing after the 48th GST Council meeting in December 2022, the CBIC Chairman stated that online games where winning depends on a specific outcome will be subject to 28% GST on the total bet amount.

In the budget announcement for 2023-24, the Finance Minister announced changes in the income tax law applicable to 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 industry expects the government to settle the ambiguity in indirect taxation as well.

Notably, the GST GOM headed by Meghalaya Chief Minister failed to arrive at consensus after deliberating the matter for over a year. In the earlier meeting, the GST Council postponed the discussion on the matter.

Earlier reports also indicated that the GST Council might categorise actionable claim as ‘services’ by putting it under Section 7 of the CGST Act for taxation purposes without getting into the debate of games of skill or chance. However, the 48th meeting ended without any deliberation on the matter citing the requirement for in-depth discussion.