Since September 2022, online gaming firms have been hit by a lot of tax notices. Companies like Delta Corp, Gameskraft, and others have previously received notices to pay Rs. 1.12 lakh crore, as per the GST department’s calculations. The next GST council meeting is scheduled to happen in June after the formation of the new government, and the sector might not get any prospective relief.
A senior government official close to the matter told Moneycontrol that it’s unlikely there will be any changes in the 28 percent Goods and Services Tax (GST) for online gaming bets.
“The GST Council meeting will happen in June-end after the new government comes in. It will review online gaming revenue from October 1 (2023) onwards,” the official told Moneycontrol. “The Council had decided 28 percent on the face value, and this is likely to continue as the GST revenue of the government from online gaming has increased 5-6 times in the last six months. The tax data will be compiled and presented before the Council.”
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Online Gaming Will Be Presented Directly For Review
Since October 1, 2023, a 28 percent GST was imposed on the full face value of online gaming bets by the GST Council, and a review was promised after a period of six months. The industry is hoping to have the 28 percent GST calculated on the gross gaming revenue rather than the face value of bets.
Gross gaming revenue (GRR) is the amount won subtracted from the amount wagered. Full face value is the bet value or contest entry amount. Since October 1, 2023, each time a game is played, a user will be required to pay 28 percent GST on the deposits made, which, as of now, is being absorbed partially by the online gaming firms.
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No Discussion On Online Gaming By GST Council’s Fitment Committee
There will not be any discussion by the GST Council’s fitment committee, rather it will be brought directly for review in front of the council, the government official added. The fitment of this committee consists of revenue officials from both the states and the Center.
“Earlier the GST from online gaming was at Rs 200 crore per month, approximately. The figure has gone up quite substantially since October 1, 2023, to Rs 1,100 crore per month. The last revenue assessment from online gaming was done in Haryana and Karnataka,” he said.
During the October-December 2023 quarter, GST from online gaming reached Rs 3,470 crore, which is more than five times than the Rs 605 crore collected in the previous quarter.“The online gaming industry may have to work on ways to increase its revenue through other business strategies,” the official added.