GST Council Meeting: Online Gaming Companies Await Tax Relief

The GST Council meeting is the focal point for discussions regarding the taxation of online gaming companies, particularly concerning the recent imposition of a 28% Goods and Services Tax (GST) on bets placed on online gaming platforms and casinos.

As of October 1, 2023, online gaming entities have been subject to the increased GST rate, which replaced the previous 18% levy that was applied only to platform fees. This shift in taxation was decided during a GST Council meeting held on July 11, 2023, with the intention of streamlining the taxation framework for the online gaming, casino, and racecourse sectors.

Following the changes, concerns have been raised by online gaming companies regarding the high GST rate and the issuance of retrospective tax notices targeting a total of Rs 1.12 lakh crore in GST liabilities for the financial years 2022-23 and 2023-24.

Industry representatives are advocating for a recalibration of the GST calculation method, suggesting that it be based on gross gaming revenue rather than the full-face value of the bets. This modification aims to provide greater clarity and relief to many affected companies, especially startups.

While the industry anticipates feedback from the GST Council regarding the impact of the newly imposed taxes, recent statements from Karnataka‘s Revenue Minister Krishna Byre Gowda indicate that online gaming companies might not receive significant concessions at the upcoming meeting. Gowda expressed confidence in the stability and effectiveness of the revised GST framework, citing increased revenue from online gaming enterprises.

Gowda’s remarks reflect the viewpoint that the new tax system is functioning adequately, and thus, the GST Council may not revisit the taxation approach despite the ongoing discussions surrounding valuation and treatment of promotions, discounts, and other incentives within the online gaming sector.