28% GST on Online Gaming Prospective In Effect: Nirmala Sitharaman

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Finance Minister Nirmala Sitharaman has said that the 28% tax on online gaming is prospective in effect, clarifying that the tax would be impacting only transactions occurring from this point forward.

During the discussion on the CGST (Second Amendment) Bill in the Lok Sabha, Sitharaman clarified, “The valuation rule to exclude winnings is prospective. So, there should be no confusion on that.” Responding to questions from Biju Janata Dal MP Sarmistha Sethi, she reiterated that the tax rate is 28%, specifying the targeted individuals and entities.

This clarification follows the August meeting of the GST Council, where the recommendation for a 28% GST on online gaming was proposed. Sitharaman outlined the valuation norms, emphasizing that the tax would be based on the amount paid or deposited, excluding prior winnings, effective from October 1.

Notably, the Finance Minister refrained from commenting on the demands raised by tax officials from online gaming companies with retrospective effect. In September, the Directorate General of GST Intelligence issued notices exceeding ₹1.12 lakh crore to numerous online gaming companies for alleged short payment of taxes.

The Lok Sabha approved the CGST (Second Amendment) Bill, affecting eligibility for top positions and membership in the GST Appellate tribunal. As a result, lawyers with a minimum of 10 years of experience are now eligible for tribunal membership.

Furthermore, the Lok Sabha passed a Bill on Tuesday to swiftly implement changes in customs and excise duties outlined in the Budget. This measure aims to curb any potentially risky financial decisions prompted by these changes.

Sitharaman explained that the Bill allows the government to collect new customs and excise duties for a 75-day period before formalizing them permanently. In contrast to income and corporate tax changes, effective from April 1 or a designated date, most customs and excise duty adjustments take effect at midnight.