The government responded on Tuesday, August 1, stating that ample enforcement provisions are in place to take action against offshore gaming platforms that fail to pay the prescribed Goods and Services Tax (GST). Pankaj Chaudhary, the Minister of State for Finance, addressed concerns about the potential impact of the 28% GST on gaming enthusiasts’ migration to offshore platforms.

GST Council Clarifies GST Rate for Online Gaming

Chaudhary informed the Rajya Sabha through a written reply that after detailed discussions, the GST Council confirmed that actionable claims supplied in online gaming would be subject to a GST rate of 28%. The decision made during the 50th meeting of the GST Council, held on July 11, 2023.

Concerns Over User Base Shift to Offshore Platforms

After the announcement of a 28% GST levy on real money gaming platforms, stakeholders expressed concerns. They worried that users might shift to offshore betting and gambling platforms. Industry experts shared their apprehensions about consumers moving towards illegal platforms. These platforms evade taxes, leading to tax losses and capital outflow. Such actions could undermine the government’s efforts to curb illegal betting and gambling.

Industry Appeals to Reconsider GST Decision

A group of over 100 gaming startups and industry federations, including Nazara Technologies, MPL, All India Gaming Federation, E-Gaming Federation, and Federation of Indian Fantasy Sports, wrote a letter to the government on July 14. They urged the government to reconsider its decision to impose a 28% GST on the sector’s full value. The group believes that this decision would benefit illegal offshore gambling websites and result in significant tax losses. Moreover, Indian gamers would be exposed to harmful offshore platforms as a consequence.

Clarity Expected from GST Council Meeting

Today, the GST Council is holding an online meeting. Industry stakeholders anticipate clarity on the application of 28% GST to online gaming, casinos, and race courses. The Council is expected to decide whether to impose the GST on the entry fee or on each bet placed in the specified areas. The meeting aims to address concerns raised by the industry, including potential implications on MSMEs, startups, and job losses. These concerns result from the uniform 28% GST rate on the full value of bets for online gaming. Earlier, games of skill attracted an 18% GST rate for the platform fee charged.

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