Valuation rules for GST on e-gaming platforms applicable prospectively: FM
This means that bets placed above the winning amount on online gaming portals will not be subject to 28 percent Goods and Services Tax (GST) with effect from October 1.
Finance Minister Nirmala Sitharaman on Tuesday said the valuation rules for levying 28 percent GST on entry-level bets on online gaming platforms will be applicable prospectively.
“The clarification on that (online gaming) was given. 28 percent is the tax and who it will apply to and who will be affected is clearly explained… The valuation rules to exclude profits are prospective. So, I hope there is no confusion about that,” Sitharaman said in the Lok Sabha.
The minister was responding to a discussion in the House of Representatives on the GST (Second Amendment) Bill, which provides for restricting the age limit for president and members of GSTAT.
This means that bets placed above the winning amount on online gaming portals will not be subject to 28 percent Goods and Services Tax (GST) with effect from October 1.
At its meeting in August, the GST Council had clarified that 28 percent GST will be applicable on online gaming.
Thereafter, amendments to the Central GST Act were passed by Parliament in August to give effect to the Council's decision. The effective date for the changes was October 1.
The changes stipulate that GST will be levied on entry-level betting on online gaming platforms and not on what players pay in each game with the winning amount.
To give an example, the minister said that if a bet is placed for say Rs 1,000, and the player wins Rs 300, and if the player again places a bet of Rs 1,300, no GST will be levied on the winning amount.
In September, GST field officers issued notices of over Rs 1.12 lakh crore to a host of online gaming companies for allegedly short-paying taxes.
Such companies have approached the court and the matter is sub judice.
To a question in the Rajya Sabha on the extent of tax evasion and the number of cause notices issued to online gambling companies, Finance Minister Pankaj Chaudhary had said on December 5: “71 notices relating to GST worth Rs 1 During the financial years 2022-23 and 2023-24 (till October 2023), Rs 12,332 cr has been spent on online gaming companies.”
“Since these notices are pending adjudication, the relevant GST claim has not yet been determined under the provisions of the CGST Act, 2017,” he said.
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First print: December 20, 2023 | 12:10 pm IST