GST Council Considers Relief for Indian Online Gaming
In an encouraging development for India’s online gaming sector, the union Finance Ministry has proposed an amendment to the Central Goods and Services Tax (CGST) Act, 2017. The proposed amendment, delineated in the new Section 11A of the legislation, would authorize the central government to refrain from recovering the GST not levied or short-levied as a result of customary industry practices.
This proposal is set to be a focal point of discussion at the upcoming meeting of the federal GST Council scheduled for June 22 in New Delhi. If approved, this amendment could potentially lead to the non-recovery of the existing 28% GST on e-gaming, casinos, and horse racing. The industry has expressed concerns about the uncertainties stemming from last year’s decision to levy this GST rate on the sector.
Furthermore, this new provision could offer protection by regularizing past practices where GST was not fully applied, thereby preventing retroactive tax demands that could financially burden e-gaming companies.
While the amendment may bring stability to the industry by regularizing past practices, it does not provide relief for overpaid taxes. Additionally, companies would not be able to claim refunds for any excess GST paid due to these practices. However, it could reduce legal disputes and enhance clarity in tax compliance moving forward.
The 52nd GST Council meeting in October 2023 had decided to impose a 28% GST on the initial bet amount, with a pending six-month review slated for the upcoming meeting. Although it is indicated that the government remains resolute in the current taxation approach on online gaming, citing regulatory benefits and a substantial increase in tax revenue since the GST’s introduction.
Notably, goods and services tax collections from online gaming have surged by as much as 400%, reaching an average of Rs 1,200 crore a month since the new regime came into effect on October 1, 2023.
Read more: Income Tax dept collects over Rs 700 crore in TDS from online gaming, crypto trade