Parliament okays legal changes to GST on e-gaming, casinos

NEW DELHI: With an eye on levying 28% GST on the face value of bets placed in casinos, horse racing and in online games from October, Parliament on Friday approved amendments to the Central and Integrated GST laws to enable the Centre to impose the tax, while keeping casual gaming – which does not involve real money, betting or wagering – outside the ambit of the levy.

“The bill makes a clear distinction between online gaming and online money gaming, specifying online money gaming as one where the player pays or deposits an amount – including through virtual digital assets – in the expectation of winning some amount in a game or event,” said a source, adding that in games where money is involved, tax will apply irrespective of whether it’s a game of chance or a game of skill.
Amid efforts from gaming companies to get the decision reversed, the finance ministry made it clear that there is no ban but merely a tax on online gaming involving money, which “is nothing but gambling by any name”.

“Gambling is an addictive activity that harms society and the individuals involved. Multiple instances have come to light where people have incurred not only huge debts but some have even lost lives,” said a government source. Ministers and officials have maintained that the GST Council had factored in all these aspects . “This decision will aid in combating money laundering, illegal income, black money and other illegal activities . It will also help in identifying and penalising those who evade taxes or indulge in fraudulent practices,” the source said.
The amendments to the IGST law seek to provide a level-playing field to domestic players by providing for tax liability on overseas players as well through mandatory GST registration, failing which their website or platform will be blocked for non-compliance. The GST Council’s decision, which came after three years of deliberations, has resulted in intense lobbying by the vocal online gaming industry, which later found support from the AAP government in Delhi.
Finance minister Nirmala Sitharaman moved the amendment in the Lok Sabha on Friday, which was approved before making it past Rajya Sabha in the afternoon. While the FM had indicated October 1 as the proposed date for introducing the levy, it will depend on states enacting their own amendments given that several assemblies are currently in session.