The 50th Meeting of the GST Council: Exploring the Taxability Issue of Online Gaming
Key Highlights :
The Goods and Services Tax (GST) Council meeting is set to take place on 11th July 2023 at Vigyan Bhawan, New Delhi. The 50th GST meeting will be chaired by Union Finance Minister Nirmala Sitharaman. The meeting is expected to address the taxability issue of online gaming.
Online gaming has been a hot topic of debate in India, with various stakeholders presenting their views on how the industry should be taxed. The GST Council had assigned a committee of state ministers led by Meghalaya Chief Minister Conrad Sangma to address the issue, but they were unable to reach an agreement and submitted their report in December. The committee maintained its previous stance of a 28 per cent tax rate on the total value, including winnings.
The sources said that the state panel reached an agreement to impose a 28 per cent tax on the supply of actionable claims. However, they couldn't determine whether the tax should be based on the net amount (after deducting prize money) or the gross gaming revenue (GGR). Gross gaming revenue (GGR) refers to the total amount collected by casinos and online gaming companies before distributing winnings to players.
The panel reportedly discussed the implications of previous proposals, including taxing based on the face value and gross revenue. According to the report, the argument has been raised that taxing GGR would have significant financial implications. Applying GST to online gaming or casinos based on GGR creates a significant disparity in tax treatment compared to lotteries, which are taxed based on face value.
Regarding casinos, an empowered group of ministers had previously recommended imposing the highest GST rate of 28 per cent on the full face value of chips or coins purchased by players, the report noted. These chips can also be used to purchase items like food and beverages. However, Goa objected to this proposal.
The 50th GST Council meeting is expected to discuss the various taxability issues related to online gaming and come up with a resolution. The Council is likely to consider the views of various stakeholders and come up with a decision that is beneficial for the industry, the government, and the players.
The online gaming industry is a rapidly growing sector in India and it is important to ensure that the taxation system is fair and equitable. The 50th GST Council meeting is likely to bring clarity on the taxation of online gaming and ensure that the industry is able to grow and contribute to the economy.
