No relief likely, GST from online gaming jumps five times: Government Official

From October 1, 2023, a 28 percent GST on full face value of online gaming bets was implemented.

Online gaming companies have been reeling under a slew of retrospective tax notices since September 2022, with Gameskraft, Delta Corp and others receiving notices to pay Rs 1.12 lakh crore (the  total due), as per the GST department’s calculations (at 28 percent on the face value of bets). The sector might also not get any prospective relief at the next GST council meeting scheduled to be held in June, after the formation of the new government, as many companies are hoping.

A senior government official in the know told Moneycontrol that any change in the 28 percent Goods and Services Tax (GST) on the face value of online gaming bets is unlikely in the review.

“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.”

From October 1, 2023, a 28 percent Goods and Services Tax was imposed on the full face value of online gaming bets by the GST Council, which promised to review the levy after six months. The industry has been seeking to have the 28 percent GST calculated on the gross gaming revenue instead of the face value of bets.

Gross gaming revenue (GGR) is the difference between the amount wagered minus the amount won. Full face value is referred to as the bet value or contest entry amount. From October 1, 2023, every time a game is played, a user has to pay 28 percent GST on the deposits made, which is currently being absorbed partially of fully by the online gaming companies.

Online gaming will not be discussed by the GST Council’s fitment committee but will be brought directly before the Council for review, the official cited above added. The fitment committee comprises revenue officials from both the Centre and states.

“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.

In the October-December 2023 quarter, GST from online gaming touched Rs 3,470 crore, a more than five-fold jump from 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.