Goa Opposes GoM’s Demand For 28% GST On Online Gaming, Seeks 18% Rate

Consensus continued to elude the group of ministers (GoM) on online gaming as Goa reportedly vetoed the proposal to impose 28% goods and services tax (GST). 

Even as almost all states rallied around the 28% GST mandate, Goa opposed the move and sought a 18% tax, PTI reported. 

Citing sources, the news agency reported that the remaining states are yet to agree on how the tax would be levied. Different states have proposed different methodologies which cover taxation across three lines – whether it is to be levied on gross gaming revenue (GGR), or fees charged by the platform, or on the full face value of bets put in by players of online games.

A final call on this matter will be taken at the GST Council meeting, which is slated to be held on July 11. The meeting, which will be chaired by Finance Minister Nirmala Sitharaman, will also see discussion on whether online gaming falls under the ambit of actionable claims of betting and gambling.

In simple words, an actionable claim refers to a claim of debt.

Goa, while batting for 18% tax on platform fee, called for treating contributions to the prize pool as supply, which is not liable for GST. On the other hand, Gujarat called for levying 28% GST on the platform. 

States such as Uttar Pradesh and West Bengal sought imposition of 28% GST on the face value of bets, while Meghalaya was open to the idea of 28% tax on either of the three ways, be it GGR or platform fees or commission charged by platforms. 

However, Meghalaya also pitched for a special mechanism to set up an escrow account to pool in prize money for payout to winners. The suggestion was made to purportedly make the process of administration of the GST easier.

Meanwhile, Maharashtra suggested a flat 28% GST rate but sought the provision of a suitable abatement for determining the taxable value of supply of the actionable claim. Telangana and Tamil Nadu also proposed 28% tax rate on GGR, provided online gaming is not brought under actionable claim of betting and gambling by the GST Council. 

With Goa refusing to relent, the GoM has reportedly handed the case over to the GST Council to take a call on the taxation of online gaming. 

Chaired by Meghalaya chief minister (CM), the GoM also comprises members from seven other states namely Goa, Tamil Nadu, Uttar Pradesh, West Bengal, Telangana, Gujarat and Maharashtra.

The divergence in views is nothing new. In its first report submitted to the GST Council last year, the group proposed levying a 28% GST on the full value of the bets placed. Subsequently, Goa flagged certain issues with the report and was also joined by other states demanding further deliberations on the matter. Following this, the Council directed GoM to relook into the matter, but the group has since met thrice but to no avail. 

With the ball now in the GST Council’s court, it remains to be seen what the FM-led panel decides on the matter.

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