Online RMG: States start amending GST laws towards implementing 28% tax from October 1

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The state governments have started rolling out amendments to their respective state GST enactments to implement the proposed 28% GST tax rate for online gaming, casinos, and racecourses. These are corresponding changes to CGST amendments carried out last month by the central government which are necessary for implementation of the tax rate change approved by the GST Council on July 11 and subsequently on August 2. 

On Wednesday, Arunachal Pradesh assembly approved changes to the APGST Act, 2017 making it one of the first states to pass the amendments towards new tax regime for real money gaming. These changes will come into effect from October 1 this year, Deputy Chief Minister Chowna Mein said as per reports.

Karnataka plans to implement 28 percent GST on the real-money gaming sector through an ordinance route. The proposal is expected to come up in the cabinet meeting scheduled today. The state will have to pass a bill in the assembly subsequently.

Meanwhile, the Haryana Goods and Services Tax (Amendment) Bill, 2023 was introduced in the Haryana Legislative Assembly on August 28 and was subsequently passed.

On Wednesday, the central government notified amendments to CGST Rules 2017 towards implementing the 28% tax rate for online gaming, casinos and horseracing. The rules will be effective on a date to be notified by the government which tentatively will be October 1, the proposed date of implementation of the new tax regime.

As deliberated by the GST Council on August 2, the CGST Rules considers the value of supplies as the amount deposited by a user, player. Interestingly, the rules don’t permit GST adjustment even when a player gets refund of initially deposited amount. After passing amendments to existing SGST laws, states also will need to notify corresponding rules to SGST Rules.

While the changes will not be retrospective per se, the revenue secretary last month stated that the present amendments are more in the nature of a clarification because betting, gambling and lottery are already included as actionable activities under the GST law and are liable to 28% tax.