GST Rate on Online Gaming Increased to 28% from Previous 18%: GST Council’s Decision on August 2
Starting from October 1, a 28% Goods and Services Tax (GST) will be imposed on online gaming. The GST Council had announced in July that online gaming, horse racing, and casinos would be subjected to a 28% GST. This final decision was taken in the 51st meeting held on August 2. Until now, these games were taxed at 18%. Additionally, Sanjay Agarwal, the Chairman of the Central Board of Indirect Taxes and Customs (CBIC), stated that the 28% GST on online gaming would come into effect on October 1 and that gaming companies might also receive legal notices.
States Instructed to Pass or Implement GST Amendment Bill 2023
Sanjay Agarwal has urged all state legislatures to pass or implement the GST Amendment Bill 2023 by September 30 or introduce it through ordinances and apply it from October 1. He mentioned that a review of its impact would be conducted six months after its implementation.
Current 18% Taxation on Online Gaming Platforms
Currently, most online gaming platforms are subject to an 18% GST. However, categories like casinos, betting, and other activities involving an element of chance attract a 28% GST. In horse racing, the government collects a 28% GST on the portion of the stake value for each bet.
How Significant is India’s Online Gaming Market?
Approximately 400 million people in India engage in online gaming. By 2025, this industry is estimated to be worth around $5 billion, which is approximately ₹41,000 crores. The local mobile gaming industry recorded an annual growth rate of 38% from 2017 to 2020, making it the fastest-growing segment globally. India’s gaming growth surpasses that of China and the United States, which grew at 8% and 10%, respectively.
Impact of These Rules on Industries
Large companies, including TCS and Infosys, are involved in the online gaming sector. Experts believe that these regulations could potentially lead to unemployment for nearly 100,000 people connected to this sector.
What Are the Key Aspects of These Regulations?
Under the IT Act 2021 amendments, the government will regulate all games as a form of gambling. The government is expected to identify places where gaming and gambling occur, especially those involving minors and adults.
How Will the Taxation Affect Different Categories of Gaming?
Users will have to pay a 10% commission on gaming platforms. For example, if a user earns ₹100 from online gaming, they will have ₹90 remaining. Under the new decision, 28% GST will be applied to this amount, which is ₹25.20 in taxes. After deductions, the user will be left with ₹64.80, whereas they previously had ₹90.
