GST Council expected to finalise tax rate on online gaming in next meeting

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GST rates for the online gaming sector are most likely to be finalised in the next GST Council meeting which is expected to be held in June as the state elections will conclude by then, said a finance ministry official.

“We expect the next meeting of the GST Council would take up the report of the Group of Ministers on online gaming, horse racing and casinos, and hopefully it would be approved,” the official said as quoted by Telegraph India.

The 49th GST Council meeting held in New Delhi on February 18 was not able to discuss the report submitted by the chair of the Group of Ministers (GoM) and Meghalaya chief minister Conrad Sangma. Prior to that, the matter was taken up in the Council’s meeting in December last year but a decision was not taken due to lack of consensus on how to tax different forms of online gaming.

As of now, the GST rate for online gaming and gambling is 28% while all other games attract an 18% GST on gross gaming revenue (GGR). The GoM has favoured the GST rate of 28% on all online games on the entry amount.

While the online gaming industry is in favour of 28% GST rate, they believe that it should be levied on the Gross Gaming Revenue (GGR) and not on the entry amount. Indian law firm Lakshmikumaran & Sridharan (LKS) which specializes in taxation also believes that GST on GGR is the best policy for the online gaming industry’s growth.

Meanwhile, the finance ministry brought into effect the new tax deducted at source (TDS) on online gaming apps from April 1, 2023. According to it, net winnings will be subject to 28% tax at the time of withdrawal.

Along with this, the minimum threshold of Rs 10,000 has been removed in order to counter tax evasion. This means that all winning amounts which the players withdraw will be taxed at 28% now.

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