The GST Council in its 51st meeting on August 2 had recommended amendments to the Schedule III of the CGST Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing and online gaming.
The amendments to the Central GST (CGST) and Integrated GST (IGST) acts, which were approved by the GST Council last week, are likely to be introduced in the ongoing monsoon session of Parliament, which will end on August 11.
The Council also recommended inserting a provision in the IGST Act, 2017, to impose GST liability on online money gaming provided by offshore entities. Such entities would be required to get GST registration in India. The amendments 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 amended provisions in the GST laws — which would specifically define online gaming, online money gaming, virtual digital assets used to pay for online games and suppliers in case of online gaming — will be effective from October 1.
How to Calculate GST on Online Gaming and Casinos?
An online gaming platform keeps money in two ways:
- A platform fee or an entry fee (usually 10-20%) for participating in the game.
- A portion of pot money is kept aside for distribution as prize money.
A Game of skill will charge 18% only on the platform/rake fee charged. To illustrate, if 10 rummy players plan on betting Rs.500 and the platform charges 10% as a fee. Then,
| Platform Fee = Rs.100 * 10% * 10 Platform Fee = Rs.100 GST chargeable = Platform Fee * 18% GST chargeable = Rs.100 * 18%GST chargeable = Rs.18 |
However, for games of chance, the entire gross value will be liable to a 28% GST rate. Thus, in the previous example, on treating the game as a game of chance or treating those earnings similar to a casino bet, the tax incidence increases to Rs.28.
| GST chargeable = Rs.100 * 28% GST chargeable = Rs.28 |
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