India Imposes GST on Online Gaming
The GST Council has introduced significant amendments to the rules governing the taxation of online gaming. Under the new framework, the GST rate of 28% will apply to online gaming, regardless of whether these gaming activities are categorized as games of skill or chance.
The amendments are expected to be implemented from October 1, 2023.
Different GST rates were applicable in the previous system based on the online game's nature. For example, games of skill (such as rummy or fantasy sports), which depend on a player's expertise, were subject to an 18% GST rate. In contrast, games of chance (such as gambling and betting), where the outcomes rely mostly on luck, were taxed at a 28% GST rate. Under the new framework, the GST rate of 28% will apply to the full value of the bets placed in online gaming. This GST rate shall apply regardless of whether these gaming activities are categorised as games of skill or chance. As per the amended Central Goods and Services Act, online gaming is defined as offering games on the internet, including online money gaming. Online money gaming refers to online games where players bet money or virtual assets to win money or virtual assets, regardless of the nature of the game being based on skill or chance. Furthermore, the Integrated Goods and Services Act has also been amended to introduce provisions requiring foreign suppliers offering online money gaming to charge GST to Indian customers. Online gaming businesses should proactively assess their tax positions and adapt their ERP systems and tax calculation processes to align with the amended GST regulations, ensuring seamless compliance.