GST Council to review online gaming after March 31: Revenue Secretary

The GST Council has revised the rate on online gaming from 18 percent to 28 percent on full face value effective October 1, 2023.

The GST Council will be reviewing the decision to levy 28 percent Goods and Services Tax (GST) on full face value on online gaming only after March 31, Revenue Secretary Sanjay Malhotra said.

“The review of the GST on online gaming will not take place in the next meeting because the six-month period gets over on March 31. So, perhaps the GST Council meeting after that can take it up,” Malhotra told Moneycontrol in an interview.

The next GST Council meeting will be held in this quarter, likely later in February, sources have said.

“A review does not necessarily mean that we change the rates. A review is only to take stock and see if anything needs to be done,” he added.

The GST Council has revised the rate on online gaming from 18 percent to 28 percent on full face value effective October 1, 2023. The revenue from the sector has seen almost six-fold increase since then, the Revenue Secretary said.

If similar tax rate is continued, the government will get a significant portion of GST revenue coming from online gaming. The government will likely garner more than Rs 7,000 crore in FY24 and Rs 14,000 crore in FY25 in GST revenue from online gaming, up from Rs 1,600 crore in 2022-23.

“In the last three months, since the introduction of the new tax regime for online gaming, we have seen an increase in revenue from Rs 605 crore to Rs 3,470 crore, which means an addition of about Rs 12,000 crore GST revenue (per year) from online gaming companies. So from Rs 1,600 crore in 2022-23 to more than Rs 7,000 crore this year is expected, and Rs 14,000 crore next year if we are able to get the same rate we got in the first three months after implementation of the revised tax rates,” Malhotra said.

Starting October 1, 2023, every time a deposit is made by a player on an online gaming platform, 28 percent GST is payable on the face value. For taxation, the deposit duration is important, not the gaming time. If the same amount of money continues on a platform, the tax will be one time. In a month, if a person withdraws and deposits three times, 28 percent GST is applicable every time a deposit is made, leading to a high tax incidence.