28% GST On Online Gaming Companies To Come Into Effect From October 1

The much debated 28% Goods and Services Tax (GST) on online gaming companies will be effective starting October 1. The e-gaming industry had been lobbying with the government to defer the new rule for some time to ensure that their internal IT systems are prepared to adapt the new change but to no avail.

The Government has notified October 1 as the date for implementation of the amended GST law provisions for taxing e-gaming, casinos, and horse racing. The amendments to the Integrated GST (IGST) Act have made it mandatory for offshore online gaming platforms to register in India and pay taxes in accordance with domestic law.

On Thursday, Central Board of Indirect Taxes and Customs chairperson Sanjay Agarwal was quoted by ANI as saying, "We are ready to implement a 28 per cent GST rate on online gaming from October 1 with the consent of all the states. The law for GST rate on online gaming will have to be passed by the assembly of states. Show cause notices to some online gaming companies are legal process."
The amended IGST Act includes a provision to impose GST liability on offshore online gaming platforms. Such entities would now be required to get GST registration in India.

Earlier, the GST Council meetings held in July and August, comprising finance ministers of Centre and states, gave nod to the amendments to the law to include online gaming, casinos, and horse racing as taxable actionable claims. The council clarified that such supplies would be subject to a 28% tax on full bet value. Last month, the parliament passed amendments to the Central GST and IGST laws in order to give effect to the Council's decision. According to PTI, the Finance Ministry has now notified that October 1 will be the appointed date for implementation of these provisions.

The GST Council in its meeting in August had decided that the amended provision to classify these supplies as actionable claims and clarifying the taxation provisions would come into effect from October 1. A review of the implementation was proposed to be carried out in the next fiscal, which is April 2024.

The Centre has said that these amendments will provide much-needed clarity regarding the taxation of supplies in casinos, horse racing, and online gaming.