Online Games With Winning Dependent On Certain Outcome To Attract 28% GST: CBIC Chief

Online games in which winning is dependent on a certain outcome would attract 28 per cent GST on the full bet value, Central Board of Indirect Taxes (CBIC) chief Vivek Johri reportedly said on Saturday.

The GST Council, chaired by Finance Minister Nirmala Sitharaman, in its meeting earlier in the day once again deferred the decision on the GST levy rate for online gaming, horse racing and casinos.

However, news agency PTI cited Johri as saying that for games where winning is dependent on a certain outcome, the CBIC would consider the full bet value and not net of margins.

Earlier in September, the Directorate General of GST Intelligence (DGGI) issued a show cause notice to Bengaluru-based online gaming startup Gameskraft Technology. The tax notice of INR 21,000 Cr alleged indirect tax evasion on a betting amount of INR 77,000 Cr between 2017 and June 2022.

Meanwhile, the report of the Group of Ministers (GoM), chaired by Meghalaya Chief Minister Conrad Sangma, on GST levy on online gaming did not come up for discussion at the GST Council meeting on Saturday.

In a press conference after the GST Council meeting, Sitharaman said that the Council could decide on only 8 out of the 15 agenda items due to paucity of time.

The GoM submitted its second report on the GST rate on online gaming to the finance minister on Thursday.

While the GoM agreed to tax the supply of actionable claims at 28%, it reportedly could not decide on the levy on the net amount (after removal of prize money) or the gross gaming revenue (GGR).

Earlier, it was reported that the panel of state finance ministers may recommend levying a uniform GST of 28% on online gaming irrespective of the classification between the games of skill and the games of chance.

According to a KPMG report, online gamers in India grew to about 400 Mn by mid-2020 from about 250 Mn in 2018, making the country the second-largest base of online gamers after China.

With the growing popularity of online gaming, a large number of gaming startups have emerged in the country over the last few years, including unicorns like MPL, Dream11, Games 24×7.

According to Inc42 data, Indian gaming startups raised $344 Mn in funding in the first half of 2022.

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