The GST Council held a video conference on Wednesday, August 2nd, 2023, under the leadership of Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman. The primary purpose of this meeting was to clarify the government's stance on taxing online gaming and casinos, building on recommendations from the 50th GST Council meeting held earlier in July. This article details the key decisions made during the 51st GST Council meeting.

Highlights of the 51st GST Council Meeting

During its 50th meeting, the GST Council had proposed a 28% GST levy on the full face value of actionable claims in casinos, online gaming, and horse racing, irrespective of whether they involved skill or chance. To resolve any ambiguities, the Council conducted a follow-up discussion at its 51st meeting and clarified the following points:

• The valuation for online gaming supplies and actionable claims in casinos will be based on the amount initially paid or deposited by the player with the supplier. This means the value will not include amounts re-entered into games or bets using previous winnings.
• The 28% GST levy on the face value remains unchanged, applying equally to games of skill and games of chance.
• Amendments will be made to the Central Goods and Services Tax Act, 2017, and the Integrated Goods and Services Tax Act, 2017 (including Schedule III), to provide clear legal provisions for taxing supplies in casinos, online gaming, and horse racing.
• A specific clause will be added to the IGST Act, 2017, to establish GST liability for online money gaming suppliers located outside India who provide services to individuals in India. A simplified registration scheme will facilitate a single registration for such suppliers in India.
• The CGST Rules, 2017, will be modified to include specific provisions for valuing online gaming supplies and actionable claims within casinos.
• The Council announced that the amendment process for the Act would be expedited, with these changes expected to take effect from October 1st, 2023. These provisions are set to become effective once officially notified by the Central Board of Indirect Taxes and Customs (CBIC).
• A review of the matter by the GST Council is planned six months after these amendments are implemented.

Expectations from the 51st GST Council Meeting

At the 50th GST Council meeting, detailed discussions occurred regarding the taxation of casinos, race courses, and online gaming. After reviewing the recommendations from the Group of Ministers (GoM) report, the Council collectively agreed to impose a 28% GST on all three activities.

Furthermore, the GST Council recommended that:

• For casinos, GST would apply to the face value of purchased chips.
• For horse racing, GST would apply to the full value of bets placed with a bookmaker or totalisator.
• For online gaming, GST would apply to the full value of bets placed.

The decision to impose a 28% GST drew considerable criticism, particularly from the online gaming industry. Applying GST on the full value of bets is anticipated to significantly reduce potential winnings for players, potentially discouraging participation and negatively impacting the revenues of online gaming businesses. (Previously, GST was only levied on the commission charged by online gaming applications.)

The GST Council's meeting on August 2nd, 2023, was scheduled to approve the necessary rules for implementing the 28% GST on casinos, race courses, and online gaming. It was also anticipated that the Council might intensify these regulations, possibly imposing stricter measures, including potential bans or other severe actions, on gaming and gambling platforms that attempt to evade tax payments.