28% GST yields 412% jump in online gaming revenue in six months: Finance Minister

The 54th GST Council met under the Chairpersonship of Union Minister for Finance & Corporate Affairs Nirmala Sitharaman in New Delhi yesterday (September 9, 2024). The GST Council inter-alia made several recommendations relating to changes in GST tax rates, provide relief to individuals, measures for facilitation of trade and measures for streamlining compliances in GST.

Briefing the media on the decisions taken at the 54th meeting of the GST Council, Sitharaman said, “The revenue from online gaming has increased by 412% in six months from October 1, 2023, when 28 per cent tax was levied on these services. It has reached Rs 6,909 crore in these six months, from Rs 1,349 crore before the notification was issued on online gaming.”

Similarly, for casinos revenue has increased by 30% – from Rs 164.6 crore in the six months prior to the decision to Rs 214 crore in six months after the decision, the Minister added.

The GST Council in its meeting in August 2023 had clarified that online gaming platforms were required to pay 28 per cent tax and subsequently Central GST law was amended to make the taxation provision clear.

Offshore gaming platforms were also mandated to register with GST authorities and pay taxes, failing which the government would block those sites.

The Council had then decided that the taxation on online gaming sector would be reviewed after six months of its implementation.

From October 1, 2023, entry-level bets placed on online gaming platforms and casinos were subject to 28% GST. Prior to that, many online gaming companies were not paying 28% GST, arguing that there were differential tax rates for games of skill and games of chance.

Sitharaman informed that at the GST Council meeting three Group of Ministers (GOM) formed – on Rate Rationalisation, Real Estate, and Online Gaming, Casinos, Horse Racing – submitted their status reports to the Council, post which the discussions can happen subsequently.

The GST Council recommend formation of two new Group of Ministers (GoM) – one on life and Health Insurance related GST with existing GoM on Rate Rationalisation, but will comprise newer members added for this limited purpose.

The GST Council also recommended formation of a GoM to study the future of compensation cess.

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