1 October 2023 top rate GST for online gaming, casinos and horse racing
The Indian GST Council, which oversees the national Goods and Services Tax, has subjected online gaming, casinos and horse racing to the top rate 28% GST from 1 October 2023. The previous rate applied was 18% for using the games and apps fees; this changed the tax base to the full value of amounts bet.
This comes despite lobbying from the sector, in particular siting the challenges for small and start-up providers. In addition, they pointed to the risk of more businesses going offshore to avoid the indirect tax levy – even though non-residents are liable to charge and collect the tax, too. There is now a simplified registration option for foreign providers.
The Council did commit to a six-month post implementation review to address these concerns. It also provided some respite by deciding not to impose the GST on the amount entered into games/bets out of winnings of previous games/bets in online money gaming or on total value of each bet placed, as would be the case in casinos.
Clarifications of definitions of supplies are still due, and is likely to define online gaming as those offered on the internet or e-network, including money gaming. The same for virtual digital assets used for gaming. Lottery wins are already subject to GST.
The online gaming industry has seen a massive boom in India over the last five years, with an annual compounded growth rate of 28-30%. Driven by easy access to affordable smart phones and cheap mobile data, the sector attracted $2.5bn in foreign direct investment, including from the likes of Tiger Global.
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