Hopes for a potential reduction or rollback of the 28 per cent GST on online gaming in India have dwindled due to the significant revenue boost it has brought since its implementation on October 1, 2023. The GST authorities have reported a remarkable increase in revenue, with collections exceeding Rs 6,909 crore, marking a 412 per cent surge in online gaming revenue alone in the past six months. The rise in casino revenue by 30 per cent during the same period has further solidified the decision to maintain the 28 per cent GST rate on both skill-based and chance-based online games.
During a recent six-hour meeting of the GST Council in New Delhi, no state, not even casino-centric Goa, opposed the 28 per cent GST levy on online gaming. Sources revealed that discussions did not include any talks about reducing or rolling back the tax on online gaming, casinos, or horse racing. Additionally, the issue of outstanding tax liabilities within the online gaming sector, which has raised concerns among companies, was not addressed during the meeting. Companies in the sector fear tax dues amounting to Rs 1.5 lakh crore, with casino tax liabilities reportedly surpassing ten times their annual revenue.
Despite the Finance Ministry's proposal of a new Section 11A to the Central Goods and Services Tax (CGST) Act during the 53rd council meeting, aiming to allow the government to forgo recovering GST in cases where it was not levied or under-levied due to common practice, this proposition might not apply to show-cause notices issued to online gaming companies before July 2023. This development has led to disappointment among many in the industry. The increase in the tax rate from 18 per cent to 28 per cent on skill-based games earlier in August 2023, which initially raised concerns within the gaming industry, has undeniably proven to be a significant contributor to revenue collections for both the Centre and states.