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28% GST on online games when winning depends on certain outcome: CBIC chief

New Delhi, December 17, 2022 

Central Board of Indirect Taxes chief Vivek Johri on Saturday said online games where winning is dependent on a certain outcome would attract 28 per cent GST on the full bet value.

Though the report of the Group of Ministers (GoM) on online gaming did not come up for discussion at the GST Council, the department would go by the view that 28 per cent GST is payable on full bet value put in by a player, and not net of margins.

The comments assume significance as the Gameskraft Technology Pvt Ltd (GTPL) GST evasion case is still in the court.

Directorate General of GST Intelligence (DGGI) in September issued a show cause notice to Bengaluru-based online gaming company Gameskraft Technology Pvt Ltd (GTPL), for not Goods and Services Tax (GST) to the tune of Rs 21,000 crore.

Asked what would be the position of the Central Board of Indirect Taxes (CBIC) since the Council has not decided yet on the GoM report, Johri said the department's view is that 28 per cent GST is payable on actionable claims arising out of betting or gambling and the tax is to be payable on full value, not net of margins.

"The gaming activity is considered as gambling because the winning is dependent on a certain outcome," Johri said.

The report of the GoM could not come up for discussions in the GST Council since it came in just two days ahead of the Council meeting and hence could not be circulated to the states. Usually, GST Council secretariat gives notice to members in the GST Council before tabling any agenda.

Meghalaya Chief Minister Conrad Sangma chaired Group of Ministers (GoM) had on Thursday submitted its report to Finance Minister Nirmala Sitharaman.

The GoM, in its last meeting in November, had agreed on a 28 per cent GST on online gaming casinos and horse racing.

However, in absence of consensus on whether the tax should be levied on only the fees charged by the portal or the entire consideration, including the bet amount, received from participants, the GoM had decided to refer all suggestions to the GST Council for a final decision.

Briefing reporter after the GST Council meeting on Saturday, Finance Minister Nirmala Sitharaman said the GoM report would be "discussed threadbare" when the Council takes it up for discussion.

[Press Trust of India]

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