Online games likely to draw 28% GST soon

A group of ministers (GoM) has found eligibility to levy a 28% Goods and Services Tax (GST) on online gaming to equal taxes on casinos, race courses and gambling, but has not yet formally submitted its report to the GST. The council, the ultimate decision-making body, said the two knew about the growth.

GoM, which has not yet finalized its formal report, is expected to submit its recommendations this week to the Union Ministry of Finance, asking these people not to be named. An eight-member committee headed by Meghalaya chief minister Conrad Sangma is reviewing the tax structure of casinos, race courses and online gaming.

“A group of ministers in casinos, race courses and online gaming have come to consensus. Our submissions report will be handed over to the respected FM, Smti. @nsitharaman Ji in a day or two and the matter will be presented at the next @GST_ Council meeting, ”the GoM chief tweeted on Wednesday. Union Finance Minister Nirmala Sitharaman is the Chairman of the GST Council. The ministry did not respond to a query on the issue.

According to the council’s website, GST casinos on services such as access to entertainment programs or entertainment features including cinematograph films, theme parks, water parks, joy rides, merry-go rounds, go-karting, race-course, ballet, Indian Premier Any sport, and so on, will attract a 28% GST. Similarly, the services provided by Race Club through Totalisator or the bookmaker’s license and gambling at such a club are also placed on the top slab of 28%.

One of the individuals quoted above said that GoM plugs all legal loopholes and brings greater clarity on taxing these items, such as tax rate, GST applicable value and tax on winning amount.

Furthermore, the same template can be extended to cryptocurrencies, attracting 18% GST.

HT reported on May 9 that the government could expand the indirect tax network on cryptocurrencies, including the use of them to exchange goods and services, with many MPs demanding that they be treated equally on a high slab of 28%. With lottery and gambling.

Saurabh Agarwal, a tax partner at consultancy firm EY India, said the high GST rates on these sectors will boost revenue. “However, all forms of online gaming should not be considered 28% of GST, because many such games are just for entertainment,” he said.

El Badri Narayanan, a law firm’s Lakshimakumaran and Sridharan’s lawyers, said the proposal to impose GST on initial betting and gaming amounts was not clear about the valuation of different gaming formats to be adopted. “Adopting a flat rate and simple valuation method on initial betting and gaming amounts for casino, racing and online gaming will result in irrelevant scenarios depending on the nature of the game and the way it is played (online or physical),” he said.

“Taxing on the full entry fee / competition or the initial deposit in the wallet used as game money will result in different final results.

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