GST Council Reaffirms 28% Tax on Online Gaming, Casinos, and Horse Racing from October 1, 2023 on Total Deposits.
Economy Business
On 2 August 2023, the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, reaffirmed its decision to levy a 28% Goods and Services Tax (GST) on online gaming, casinos, and horse racing, effective 1 October 2023, applicable to total player deposits rather than winnings.
- At its 51st meeting, the GST Council confirmed the tax would be calculated on the full face value of bets or deposits—not on gross gaming revenue (GGR) or platform fees. This applies uniformly to both games of skill and games of chance, closing earlier ambiguity in tax treatment among state finance ministers.
- A subsequent Law Committee under CGST/IGST Acts recommended that taxable value include the total amount deposited by users into platforms—including real or digital assets. Measures were also proposed to mandate offshore platforms’ GST registration and empower Information Technology acts to block access on non-compliance.
- Since the revisions came into force, monthly GST collections from online gaming rose dramatically—from roughly ₹250 crore to ₹1,100 crore, a 412% increase. However, the sector saw 20–30% revenue decline and profit margins shrink by 60–70%, causing significant distress especially for start‑ups and SMEs.
Main Point :- (i) Over 27 gaming companies, including industry names like Dream11 and Gameskraft, are contesting retrospective GST demands exceeding â‚ą1.12 lakh crore placed by authorities.
(ii) They argue that games of skill have long been legally distinguished from gambling and should not attract the same levy. The dispute is now pending before the Supreme Court.
(iii) The Council will review the impact of this 28% tax regime six months after implementation, i.e. around April 2024, considering state-specific concerns and potential industry relief. Despite warnings from states like Goa, Karnataka, and Sikkim about heavy burden, the overall consensus remains to uphold the levy—citing revenue and regulatory consistency
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