A virtual meeting of the GST Council is scheduled to take place on Wednesday, August 2nd. The meeting will be chaired by Union Finance Minister Nirmala Sitharaman, who heads the Council. This meeting holds significant importance for those involved in the online gaming business, as the Council will discuss and make a final decision on the proposal to impose a 28% GST on online gaming, casinos, and horse racing.
In the previous meeting, the GST Council had decided to levy a uniform 28% tax on the full face value for online gaming, casinos, and horse racing. However, since then, many big online gaming companies and their CEOs have been requesting the government to reconsider this decision, as they believe it may hinder the growth of new-age startups.
On July 11th, the GST Council approved the imposition of a 28% tax on the full face value of bets in online gaming, casinos, and horse racing. The Law Committee, which consists of Centre and state tax officers, has prepared draft rules regarding the computation of supply value for tax purposes. The committee has proposed that the value of supply for online gaming should be the total amount deposited by players with online gaming platforms in the form of money or virtual digital assets. For casinos, the proposed supply value would be the amount paid by players for the purchase of tokens, chips, coins, or tickets.
The All India Gaming Federation (AIGF), representing companies such as Nazara, GamesKraft, Zupee, and Winzo, has criticized the decision made by the GST Council, calling it “unconstitutional, irrational, and egregious.” Gamers from Tier II and Tier III cities, under the banner of ‘Indian Gamers United,’ have also expressed their concerns in a letter to Sitharaman. They believe that high taxation will drive gamers towards illegal and offshore platforms where no tax is payable, but it will also expose them to higher risk. The association has urged for a distinction to be made between games of chance and games of skill, stating that gaming is a skill-based activity and should not be grouped with gambling and horse racing.
In the upcoming GST Council meeting, it is expected that a clear definition of actionable claims will be approved. Additionally, online money gaming may be included in the definition of online gaming, and a definition of “virtual digital asset” may be inserted in the GST Law as defined under the IT Act.
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Summary:
★A virtual meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman, is set to be held on Wednesday, August 2nd.
★The meeting will discuss and make a final decision on the proposal to impose a 28% GST on online gaming, casinos, and horse racing.
★The previous decision to levy a uniform 28% tax on these activities has faced criticism from big online gaming companies and gamers.
★The Law Committee has prepared draft rules for the computation of supply value for tax purposes, proposing that the total amount deposited by players should be considered for online gaming, and the amount paid for tokens, chips, coins, or tickets should be considered for casinos.
★The All India Gaming Federation and ‘Indian Gamers United’ have expressed their concerns and called for a relook at the taxation policy, arguing that gaming should be differentiated from gambling and horse racing.
★The upcoming GST Council meeting is expected to approve a clear definition of actionable claims, include online money gaming in the definition of online gaming, and introduce a definition of “virtual digital asset” in the GST Law.
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