• Notification Date: 29-04-2023
• Notification No: N/A

Finance Ministry weighs Various GST Rates for Online Gaming and Betting

The Finance Ministry is considering differential tax treatment for online gaming for the categories of games of chance and games of skill. Online games in betting or gambling are likely to attract 28 per cent Goods and Services Tax (GST) while those involving some amount of skill will likely be taxed at a lower 18 per cent, an official said. 

The matter is expected to be taken up for discussion by the GST Council in its next meeting, which is likely either in the month of May or June. 

“All online games are not games of chance and are not in the nature of betting or gambling. Many options are being considered; nothing is off the table. We are also going through the rules for online gaming brought out by MeitY. The Finance Ministry will be presenting its view before the council,” the official said, adding that the task would be to differentiate between what should be a game of skill and what can be called a game of chance. 

At present, online gaming platforms pay 18 per cent GST on platform fees and not on the full value including prize money. A Group of Ministers, under Meghalaya Chief Minister Conrad Sangma, had in December last year, submitted a report on GST on online gaming to Finance Minister Nirmala Sitharaman. In its last meeting in November, the GoM had agreed on a 28 per cent GST on these segments. However, in absence of consensus on whether the tax should be levied on only the fees charged by the portal or the entire consideration, including the bet amount, received from participants, the GoM had decided to refer all suggestions to the GST Council for a final decision. 

The online gaming industry had grown exponentially during the pandemic. The online gaming industry is currently contributing more than Rs 2,200 crores of GST, as per a study by EY and Assocham. As per a KPMG report, the online gaming sector would grow to Rs 29,000 crore by 2024-25 from Rs 13,600 crore in 2020-21. 

The long-pending issue of levying GST on online gaming and drawing uniformity with casinos and horse racing has been discussed several times in the GST Council in the last two years, with many states pitching for a lower tax rate on those online games which require skill. 

In its report submitted to the Council earlier in June 2022, the GoM had suggested a 28 per cent GST on the full value of the consideration, including contest entry fee, paid by the player, without making a distinction for games of skill or chance. However, the Council had asked the GoM to reconsider its report.