GST Council Meet Applies 28% GST on Online gaming, horse racing and casinos

New Delhi, 12th July 2023: Online gaming, horse racing, and casinos will be subject to a 28% Goods and Services Tax (GST) on the full face value. The GST Council made the decision at its 50th meeting on Tuesday.

Finance Minister Nirmala Sitharaman, who leads the GST Council, announced the decision to media in New Delhi, adding that some adjustments to the GST Act will also be made to cover online gambling.

The GST Act’s Section 3 will be revised to include online gaming and horse racing as taxable actionable claims. The bill is expected to be introduced during Parliament’s Monsoon Session.

According to an official announcement, tax will be levied on the face value of the chips purchased in casinos, the whole value of bets placed with a bookmaker or totalisator in horse racing, and the full value of bets placed in internet gaming.

While the move has disappointed the business, Sitharaman has stated that the objective was not to end the industry. Noting that this was a “moral question,” she stated that the business could not be encouraged more than vital items.

Sanjay Malhotra, Revenue Secretary, stated that the rate on internet gambling has always been 28%. The old cases will be prosecuted. Certain decisions have been made by the courts, but the revenue agency will challenge them, he added.

Joy Bhattacharjya, Director-General, Federation of India Fantasy Sports said, “We are disappointed that the GST Council and authorities have chosen to apply 28% GST on the total entry amount including prize money. This decision will have a chilling effect on the $ 2.5-billion FDI already invested by investors and jeopardise potentially any further FDI in the sector. Further, this decision will shift users to illegal betting platforms leading to user risk and loss of revenue for the government.”

While the particular change will need to be assessed, Abhishek Jain, National Head & Partner, Indirect Taxes, KPMG, remarked that the proposal to collect 28% GST on whole value goes considerably against industry expectations.

He said, “This recent growing sector was expecting relief with clarification on GST only being applicable on the platform fee earned by them.”