Cabinet Approves Amendments to GST Laws, Imposing 28% GST on Online Gaming, Casinos, and Horse Race Clubs

The Union Cabinet has given the green light to modify GST laws, imposing a 28% tax on the total face value of bets made in online gaming, casinos, and horse race clubs. 

These changes to the Central GST (CGST) and Integrated GST (IGST) act, endorsed by the GST Council last week, are expected to be introduced during the ongoing monsoon session of Parliament, concluding on August 11. 

The 51st meeting of the GST Council on August 2 recommended amendments to Schedule III of the CGST Act, 2017, in order to provide clarity regarding the taxation of supplies in casinos, horse racing, and online gaming.

Furthermore, the Council proposed the inclusion of a provision within the IGST Act, 2017, to enforce GST liability on online money gaming services offered by offshore entities. These entities would need to obtain GST registration in India. 

The modifications will also address the potential of blocking access to foreign-based online gaming platforms if they fail to adhere to registration and tax payment requirements. 

The revised clauses within the GST laws will not only establish precise definitions for terms like online gaming, online money gaming, and virtual digital assets used for online games, but will also delineate the responsibilities of suppliers in the context of online gaming. These amendments are set to take effect from October 1.

The Union Cabinet, in its recent meeting, approved changes to CGST and IGST laws. The GST Council, composed of the Union finance minister and state representatives, determined that a 28% GST will be imposed on entry-level bets in gaming platforms and casinos. These amendments are anticipated to be introduced in the ongoing Parliament session, with states making corresponding amendments to their State GST laws.

Currently, the online gaming industry and certain horse racing clubs are subject to a GST rate of 18% on platform fees/commissions, which range from 5% to 20% of the total face value. Some horse race clubs are also paying 28% on the entire face value. 

These entities are challenging the 28% levy on actionable claims related to betting and gambling through legal channels. Casinos are currently taxed at 28% on their Gross Gaming Revenue (GGR). The proposal to impose 28% GST on the full face value of entry-level bets is expected to boost GST revenues.

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