GST Council Plans to Impose 28% Tax on Online Gambling Transactions in Digital Currency

GST Council Plans to Impose 28% Tax on Online Gambling Transactions in Digital CurrencyThe Goods and Services Tax (GST) Council is to consider a proposal to tax transactions, payments, and winnings in digital assets at a 28% rate, as reported by media agency Moneycontrol. Discussions on the matter will take place during the GDT’s meeting, which will be held tomorrow. If approved, the tax would be levied on the full face value of such transactions.

A reliable source familiar with the matter revealed that the proposed amendment to the Central GST Act affects winnings and deposits made with digital assets. Under the provisions of the proposed amendment, the value of supply of online gaming is the total amount paid by the player to the operator. Regardless of whether the actionable claims are supplied in money or virtual assets, all companies or individuals who operate online gaming platforms will be required to pay a 28% tax on the full value of every transaction.

At the moment, online gambling platforms are taxed 18% GST on their fees, also known as gross gaming revenue (GGR), instead of the full amount of the transactions, or the Contest Entry Amount (CEA). In an interview on July 13, Revenue Secretary Sanjay Malhotra told journalists from Moneycontrol that the proposed amendment would make the taxation of online gambling platforms more straightforward.

Goods under the Central Goods and Services Tax Act of 2017 are defined as actionable claims. Thus far, only lottery, sports betting, and gambling fell under the category of actionable claims. If councilors approve the proposed amendment, horse racing, and online gaming will be classified as actionable claims, too.

The Rules for Those Operating Outside India Will Change If the Proposed Amendment Receives Approval

During its meeting, the Council is also expected to approve a special provision, under which everyone supplying online money gaming, defined in clause 80B of section 2 of the CGST Act, 2017, and located outside the taxable category will be required to pay an integrated tax on such supplies to individuals located in the taxable category.

Moreover, the proposed amendment stipulates that everyone targeting Indian players and supplying online money gaming from a location outside India will have to go through a mandatory registration process. During the meeting, councilors are also expected to propose legal amendments aimed at providing further clarity regarding the tax treatment of casinos under the GST.

The GST Council’s meeting will be held via video-conferencing and comes just several weeks after its previous meeting. The goal of the current meeting is to underline the government’s commitment to streamlining the taxation of online gaming platforms. By bringing online gaming transactions under the GST scope, the central government tries to establish a fair and transparent taxation process in the rapidly growing digital gaming industry.