October 9, 2023
28% GST on Online Games to be Levied on Entry Amount and not Winnings

28% GST on Online Games to be Levied on Entry Amount and not Winnings

In 2023, it was announced that 28% GST (Goods and Services Tax) would now be levied on online gaming, casinos, and horse racing. Currently it’s stated that this would come into effect from October 1st 2023 and would have a significant impact on the online gaming industry and its stakeholders. Therefore, it’s important to know exactly what this means and how it will affect the overall industry. 

GST Will Only be Applicable To The Deposit

The 28% GST, as announced, will only be applied to the deposit or add cash and will not be levied on the winnings or while entering a game. Finance Minister Nirmala Sitharaman at a press conference stated, “Valuation of supply on online gaming & actionable claims in casinos may be done basis amount paid or payable to or deposited by supplier or on behalf of the player excluding amount entered into games from winnings of previous games or bets.”

Now, how does it work? Basically, if a player deposits ₹1,000, the GST will be calculated as the following:

Add cash amount: ₹1,000

GST (@28%): ₹220

Please note that GST is levied on amount coming into the account and not on amount deposited, so here 28% GST would be levied on approximately ₹780 – which is around ₹220 and not other way around where people may think that the GST will be applied on ₹1,000.

The add cash amount will be inclusive of GST.

If a player uses that money to win ₹300, then the following will be true:

  • They will not have to pay GST on ₹1,300 
  • They will not have to pay GST for the winning amount of ₹300
  • They will not have to pay GST during the time of withdrawal
  • They will not have to pay GST for every game they play

The Policy Will Be Reviewed in 6 Months

It has been announced that the GST Council will be reviewing the tax regime six months after it has been implemented. This will help the government and the stakeholders take stock of the effectiveness of all the measurements that have been implemented, especially in relation to offshore gaming players. Many within the online gaming industry have hailed this move as they continue to prepare for the implementation of the new GST policy. 

The Finance Minister has clarified noting, “It (28% GST on online gaming and casinos) is expected to be implemented from 1st October… It is also decided that this decision will be reviewed after six months after it is implemented. When I say six months it does not mean starting from today, it begins after when it is implemented.”

The GST Amount Collected Will Go Directly to the Government

Online gaming apps will collect the GST amount and submit it to the government on behalf of the players. They will not keep any portion of the GST amount that gets collected.

The Online Gaming Industry Remains Upbeat Despite Changes

While the new GST policy will definitely affect the platforms fantasy apps, online rummy game apps, and the gamers who are passionate about these platforms, this is also an opportunity for industry players to innovate and come out on top. Top industry experts have stated that they will re-pivot and come up with products and offerings that will not only boost the gaming industry as a whole, but also bring innovation to the forefront.