The GST Council was held on Wednesday, 2nd August 2023, via video conferencing, chaired by Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman. This Council meeting was held to clarify the government’s stance on the taxation of online gaming and casinos, based on the recommendations of the Council in the 50th GST Council meeting held just a few weeks earlier, on 11th July.
Here are the highlights of the 51st GST Council meeting.
Highlights of the 51st GST Council meeting*
For some background, the GST Council had recommended in the 50th meeting that the actionable claims supplied in casinos, online gaming, and horse racing may be taxed at 28% GST on the full face value, irrespective of whether the activity was a game of skill or chance.
Now, in a bid to remove all ambiguity, the Council held a follow-on discussion in its 51st meeting to clarify its stance as follows-
- The valuation of the supply of online gaming and actionable claims in casinos is to be done based on the amount paid/payable to/deposited with the supplier by the player and not on the total value of each bet placed. Hence, the value will now exclude the amount entered into games/bets out of the winnings of previous games/bets.
- There will be no change in the levy of 28% GST on the face value, irrespective of whether it's a game of skill or chance.
- The Central Goods and Services Tax Act, 2017, and Integrated Goods and Services Tax Act, 2017, (including Schedule III of the CGST Act, 2017), will be amended to provide clarity on the taxation of supplies in casinos, online gaming and horse racing.
- A specific provision in the IGST Act, 2017, is to be inserted to provide for the liability to pay GST on the supply of online money gaming by a supplier located outside India to a person in India. This will be for a single registration in India for the said supplier through a simplified registration scheme.
- The CGST Rules, 2017, are to be amended to insert specific provisions for the valuation of the supply of online gaming and the supply of actionable claims in casinos accordingly.
- The process of making amendments to the Act will be done at the earliest, according to the Council, and the amendments are expected to be brought into effect from 1st October 2023.
- The GST Council will reconvene six months post implementation to review the matter.
*To come into effect once notified by the CBIC.
Expectations from the 51st GST Council meeting
In the 50th GST Council meeting, the Council discussed and deliberated on the taxability of casinos, race courses and online gaming. After taking into consideration the recommendations of the Group of Ministers (GoM) report, the Council reached a consensus to levy GST at 28% on all three aforementioned activities.
The GST Council further recommended that-
- In the case of casinos, GST will apply on the face value of the chips purchased.
- In the case of horse racing, GST will apply on the full value of the bets placed with the bookmaker/totalisator.
- In the case of online gaming, GST will apply on the full value of the bets placed.
The move to levy 28% GST received a lot of flak, especially from the online gaming sector. By charging GST on the full value of the bets placed, the potential winnings for a customer will drastically drop. This, in turn, will deter players and overall impact the revenues of the online gaming business. (Previously, GST was only levied on the commission that the online gaming app charged.)
Now, the GST Council plans to meet on 2nd August 2023 to approve the rules to implement the 28% GST levy on casinos, race courses and online gaming. Further, it is expected that the GST Council may take the stringency of these rules up a notch and impose measures on gaming/gambling apps and platforms that avoid paying taxes. Such apps and platforms could even face a ban or other strict action.
We at Clear will bring you live updates from the GST Council meeting, so watch this space for the latest news, highlights, press release, and more!