28% GST on Online Gaming, Casinos and Horse Racing; Will It Be Charged On All Bettings? Details Here

Presently, the GST regime differentiates online games based on skills versus chance. With the recommendation made at the 50th GST Council meeting, 28% GST will be charged on full face value.

New Delhi: Parliament on Friday passed the amendments in the Central GST as well as Integrated GST legislations to allow 28 per cent levy on full face value of bets placed in casinos, horse racing and online gaming. The amendment in IGST Act relates to inserting a provision to impose GST liability on online money gaming provided by offshore entities. Such entities would be required to get GST registration in India. It will also provide for blocking access to online gaming platforms located overseas in case of failure to comply with registration and tax payment provisions.

The two bills (Central Goods and Services Tax (Amendment) Bill, 2023 and the Integrated Goods and Services Tax (Amendment) Bill) were cleared by the Union cabinet earlier this week, and their passage by Parliament will now allow implementation of the 28 per cent GST levy on online gaming, horse racing and gambling in casinos from October 1 onwards.

CGST amendment bill

The CGST amendment bill defines ‘online gaming’ as a game on the internet or an electronic network. ‘Online money gaming’ means online gaming in which players pay or deposit money, including virtual digital assets (VDAs), in the expectation of winning money or VDAs, in any event including game, scheme, competition or any other activity, whether or not its outcome or performance is based on skill, chance or both.

GST Rates on Online Gaming and Casinos 

Presently, the GST regime differentiates online games based on skills versus chance. With the recommendation made at the 50th GST Council meeting, 28% GST will be charged on full face value. The following GST rates are applicable to online gaming and casino earnings:

• For a game of skills, such as esports, puzzles, and some card games, an 18% GST is chargeable under HSN 998439 only on the platform’s commission/service fee or on gross gaming revenue (total stake value – distributed winnings).
• For a game of chance, including gambling at casinos, a 28% GST is chargeable under HSN 999692 on the total bet value.
• With regard to horse race clubs, some are paying 18 per cent GST on platform fees, while few are paying 28 per cent on the full face value. These industries are disputing the 28 per cent levy on actionable claims in the form of betting and gambling at various legal fora. Casinos too are currently paying 28 per cent GST on Gross Gaming Revenue (GGR).

For example, if a bet is placed for say Rs 1,000, and the player wins Rs 300, and if the player redeploys the winning amount or Rs 300 into the game then GST will not be levied on the winning amount.

After August, 28% GST on full face value will be charged on online gaming, casinos and horse racing.

Once the Centre amends the CGST, IGST and UT GST laws, then the states and two Union territories with Assemblies will be required to bring similar changes in SGST Acts. After the legislative changes, detailed rule will be announced.  The target is to complete all these steps by the next month-end to ensure implementation from October 1, 2023.

Will GST be charged on all casino bettings?

The GoM has proposed to charge GST only on the initial money spent on entering the casinos and not on future bettings made through winnings from previous rounds.

According to reports, casual online gaming, which does not involve money or any consideration, will not be taxable under GST.

Online gaming industry

The online gaming industry grew by 28 per cent in 2021 to reach USD 1.9 billion, as per NITI Aayog estimates.

Over the past week since GST Council’s recommendations were announced, online gaming industry has expressed serious concerns on implications of the decision on the sector. They said that the move will have negative ramifications for the sector. On Wednesday, Mobile Premier League (MPL) laid off about half of its India team or close to 350 people to cut down cost burden due to the increase in GST rate to 28 per cent.

On Thursday, Kavin Bharti Mittal-founded Hike, which owns Rush Gaming Universe, laid off about 55 people — more than one-fifth of its total workforce — to absorb the impact of the GST hike on online gaming.

(With inputs from agencies)

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