The Minister of State for Finance Pankaj Chaudhary was answering to a question if the impact of 28% GST will lead to gamers shifting to offshore platforms
After the decision to levy 28% GST was announced on July 11, one of the major concerns expressed by the stakeholders was around the shift of user base to offshore betting and gambling platforms
The GST Council is holding an online meeting on August 2 to take a final decision on how to levy GST on online gaming, casinos and race courses
Inc42 Daily Brief
Stay Ahead With Daily News & Analysis on India’s Tech & Startup Economy
The government said on Tuesday (August 1) that sufficient enforcement provisions exist to take action against offshore gaming platforms which do not pay prescribed GST.
The Minister of State for Finance, Pankaj Chaudhary, was answering a question about whether the impact of the 28% GST would lead gamers to shift to offshore platforms.
“After detailed deliberations, the GST Council in the 50th meeting held on 11th July, 2023 has clarified that actionable claims supplied in online gaming are leviable at a GST rate of 28%,” Chaudhary informed Rajya Sabha in a written reply.
After the decision to levy 28% GST on real money gaming platforms was announced on July 11, one of the major concerns expressed by the stakeholders was around the shift of the user base to offshore betting and gambling platforms.
Industry experts told Inc42 earlier that the decision will drive consumers towards offshore and illegal platforms that pay no taxes, resulting in loss of taxes and capital outflow at a time when the government is trying to curb the menace of illegal betting and gambling apps.
A group of over 100 gaming startups and a few 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 asking it to reconsider the GST Council’s decision to levy a 28% GST on the sector on full value.
“The biggest beneficiary of such a change in the tax regime will be black market operators including illegal offshore gambling websites and nefarious unscrupulous elements. This will result in substantial tax loss to the government and will expose Indian gamers to harmful offshore gambling websites, which are not accountable to the Government of India,” the letter noted.
Since the GST council decided that a uniform 28% tax would be levied on the full value of the bets placed in case of online gaming, the industry has expressed many concerns, such as the impact on MSMEs and startups, job losses, among others. Earlier, only 18% GST was applicable on the platform fee charged for games of skill.
Meanwhile, the GST Council is holding an online meeting today to take a final decision on how to levy GST on online gaming, casinos and race courses.
The GST Council is expected to give clarity on how it plans to impose the 28% GST in the aforementioned areas — either on the entry fee or each bet.
Note: We at Inc42 take our ethics very seriously. More information about it can be found here.