GST Council slaps 28% tax on turnover of online gaming firms

During its 50th meeting held on Tuesday, Goods and Services Tax (GST) Council has decided to impose a 28% indirect tax on the turnover on online gaming companies. The GST Council, comprised of state finance ministers and chaired by Union Finance Minister Nirmala Sitharaman, had earlier formed a panel to look into taxing casinos, horse racing and online gaming.

It has not previously been able to decide whether to impose a 28% GST on the face value of bets, or gross gaming revenue, or just on platform fees.

West Bengal finance minister Chandrima Bhattacharya said, “GST Council has decided that online gaming, casinos and horse racing will be taxed at 28 per cent at entry point on full face value of bets," she told reporters here.”

Sudhir Mungantiwar, Maharashtra forest cultural and fisheries minister, said the tax on online gaming companies would be imposed without making any differentiation based on whether the games required skill or were based on chance.

The minister said that changes will be made in the GST law to state that these three supplies are not actionable claims, like that of lottery and betting.

Mungantiwar said the council has decided to do away with the distinction of game of skill and chance in case of online gaming.

28 per cent tax would be levied on the full face value of bets, Mungantiwar said.

The move will come as a major setback for foreign investors such as Tiger Global and Sequoia Capital who have invested heavily in fantasy cricket-linked companies like Dream11 and Mobile Premier League.

The gaming industry reacts 

"This means that GST will be applicable to gross revenue/total prize pool," Reuters quoted Roland Landers, CEO of The All India Gaming Federation as saying.

"We believe this decision by the GST Council is unconstitutional, irrational, and egregious," he added.

With inputs from agencies.