GoM On GST Levy On Online Gaming To Submit Report In 1-2 Days: Report

The Group of Ministers (GoM), formed by the Ministry of Finance to decide the GST levy rate on online gaming, casinos and horse racing, will reportedly submit its report in a day or two to Finance Minister Nirmala Sitharaman. 

The GST Council will likely convene in the end of August or early September to discuss the contents of the report, sources told news agency PTI. 

Led by Meghalaya Chief Minister Conrad Sangma, the GoM last met on July 12, but failed to make any headway on deciding the goods and services tax (GST) rate. 

In an earlier report presented before the Council, the GoM had proposed levying 28% GST on gross sales value for horse racing, online gaming and casinos. While a majority of the states agreed, the GST Council still could not come to a consensus on the matter as Goa wanted further discussions with regards to GST on casinos.

Finally, the GST Council directed the GoM to hold further deliberations and submit a final report by July 15. However, there was a delay in the report and it hasn’t been submitted till now.

It is pertinent to note that online games involving betting or gambling currently attract a GST of 28%, while the rate is 18% for those not involving betting or gambling. On horse racing, GST is levied at 28% on the total bet value. Casinos, on the other hand, currently attract a GST of 18%.

The last report submitted to the Council recommended taxing online gaming at the full value of the consideration, including the contest entry fee paid by a user. For casinos, the panel suggested that GST be imposed on the full face value of the chips purchased from a casino by a player, adding that no further GST should apply to the value of bets placed in each round of betting.

For race courses, the GoM recommended that GST be levied on the full value of bets placed with the bookmakers.

The government had set up the panel to re-evaluate the GST on these services in May last year. The group also comprises Gujarat finance minister Kanubhai Patel, Goa panchayati raj minister Mauvin Godinho, Tamil Nadu finance minister P Thiaga Rajan, Uttar Pradesh finance minister Suresh Khanna and Telangana finance minister T Harish Rao.

Meanwhile, the industry continues to wait with bated breath regarding the outcome of the final report. Many in the online gaming industry have opined that an increase in GST from the current 18% would raise costs and put the entire online gaming industry under pressure. 

“Our only request has been to charge GST on the Gross Gaming Revenue, which is the practice that has always been followed and is also globally accepted,” All India Gaming Federation CEO Roland Landers earlier told Inc42. 

In a respite for the industry, the GoM is likely considering imposing 28% GST on gross gaming revenue, in line with demands from the industry.

The homegrown online gaming space is currently dominated by unicorns such as Dream11, Mobile Premier League, Games24x7, among others. 

According to a report, the number of online gamers in India grew 1.6X from 250 Mn in 2018 to around 400 Mn by mid-2020. According to an Inc42 analysis, the Indian esports market is expected to reach $175 Mn in aggregated revenue by 2023.