Reports: GoM may determine different GST valuation mechanisms for games of skill and chance

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The Group of Ministers (GoM) has been working on formulating GST rates on casinos, racecourses and online gaming and draw up the definitions to classify online games as games of chance and skill.

Currently, 18% GST is levied on online games of skill and 28% on games of chance. Games of skill includes eSports and card games that require actual skill and games of chance are  purely luck-based. The GoM is tasked with determining if an online game is a game of chance or skill based on its structure and criteria of playing.

As per ET Now, the GoM may put 28% GST on platform fee as well as the winning pot for games of chance and 28% GST only on the platform fee for games of skill. In August 2021 the Madras High Court acknowledged that games that require skills to win cannot be categorized under gambling.

Sameer Barde, CEO of E-Gaming Federation (EGF), said that while the hike in GST from 18% to 28% will not make the entire industry non-viable it will be catastrophic for the online gaming industry. He added, “Online skill gaming is different from gambling and the Supreme Court, and several High Courts have already reaffirmed the status of skill-based games as legitimate business activity. We hope GoM will appreciate the unique nature of the industry and ideally recommend a rational tax structure that will help in creating mutually benefitting situations for all the stakeholders”.

Recommendations from the central tax officials have also been given to GoM on how to approach taxation on online gaming. Additionally, the Attorney General’s opinion has also been sought. The GoM might provide an official definition that separates different games based on how they are played and what amount of skills are required to win. After the statement from GoM all future games might be categorized differently under games of chance and games of skill.