Different online games may attract different slabs of GST: Government

Update: 2023-04-27 11:05 GMT

If the finance ministry has its way, online games in the nature of gambling will attract 28 per cent Goods and Services Tax (GST) and those involving some skill may be taxed at 18 per cent.

The ministry is considering classifying online gaming into categories of skill and chance and levying different GST, an official said.

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Online games where winning is dependent on a certain outcome or is in the nature of betting or gambling would attract 28 per cent GST while those which involve some amount of skill could be taxed at a lower 18 per cent.

A final decision would be taken by the GST Council at its next meeting likely in May or June.

“All online games are not games of chance and are not in the nature of betting or gambling. The finance ministry will present its view before the Council,” the official told the media in New Delhi.

Current GST

Currently, online gaming attracts 18 per cent GST. The tax is levied on gross gaming revenue or the fees charged by online gaming portals.

A Group of Ministers (GoM) chaired by Meghalaya Chief Minister Conrad Sangma in December 2022 submitted a report on GST on online gaming to Finance Minister Nirmala Sitharaman.

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The GoM agreed on a 28 per cent GST on online gaming. But in the absence of consensus on whether it should be levied on only the fees charged by the portal or the entire consideration, all suggestions were referred to the GST Council.

Charging 28 per cent GST on the entire amount, which a player deposits for a game for both categories of online game, would reduce the prize money left for distribution and drive away players from legitimate tax-deducting portals.

This may also encourage online gamers towards unlawful portals that do not deduct tax, experts said.

Online business

Online gaming witnessed a spurt during the Covid lockdown, with the number of users in India rising substantially.

As per a KPMG report, the online gaming sector would grow to Rs 29,000 crore by 2024-25, from Rs 13,600 crore in 2021.

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Many states felt that games of skill should not be treated on par with games of chance.

(With agency inputs)

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