GST Council decides to levy 28% GST on Online Gaming w.e.f. Mar 31: Revenue Secretary

The Revenue Secretary Sanjay Malhotra said that the GST council will be reviewing the decision to levy 28% from 18% Goods and Services Tax (GST) on full face value on Online gaming after Mar 31.

According to Mr. Malhotra, "The review of the GST on online gaming will not take place until next meet because the six-month period gets over on Mar 31. So, may be the GST Council meeting after than can discus this matter."

The next meeting is supposed to happen in this quarter, likely in Mar, sources have stated. He further added, "A review does not necessarily mean the implication of change in rates. This review is to take stock and check whether something needs to be done."

After GST Council has revised rate on online gaming from 18% to 28% on full face effective Oct 1, 2023, the revenue from this sector has made almost 6-fold increase since then. If similar rate of tax is continued, government will get significant portion of GST revenue from online gaming sector and government will collect more than 7,000 crore in FY24 and Rs 14,000 crore in FY25 in GST revenue from 1,600 crore in 2022-23.

Since the introduction of new tax regime for online gaming, Council has seen in increase in collection from 605 crore to Rs 3,470 crore, which means the addition of about 12,000 crore GST revenue per year from online gaming sector. Therefore, from 1,600 crore in 2022-23 to more than 7,000 crore this year is expected and Rs 14,000 crore next year if Council will get the same rate we got in the first 3 months after execution of the revised tax rates.

From Oct 1, 2023, at every deposit made by player on platform, 28% GST is payable on face value. For taxation, the deposit duration is important, not the gaming time.If same amount of money continues, the tax will be one time. So, to sum up, in a month, if a gamer withdraws and deposits 3 times, 28% GST is applicable every time, which leads to high tax incidence.