Currently, on-line gaming attracts 18 per cent GST. The tax is levied on gross gaming income, which is the charges charged by on-line gaming portals.
A ultimate resolution on the taxation on on-line gaming can be taken by the GST Council in its subsequent assembly, which is probably going in May or June
The finance ministry is contemplating classifying on-line gaming into classes of ability and likelihood, and levying a differential charge of GST, an official mentioned. Online video games the place profitable relies on a sure consequence or is within the nature of betting or playing would appeal to 28 per cent Goods and Services Tax (GST), whereas these which contain some quantity of ability could possibly be taxed at a decrease 18 per cent.
A ultimate resolution on the taxation on on-line gaming can be taken by the GST Council in its subsequent assembly, which is probably going in May or June.
“All on-line video games should not video games of likelihood and should not within the nature of betting or playing. The Finance Ministry might be presenting its view earlier than the council,” the official told reporters here.
The activity can be to distinguish between what must be a sport of ability and what might be known as a sport of likelihood.
Currently, online gaming attracts 18 per cent GST. The tax is levied on gross gaming revenue, which is the fees charged by online gaming portals.
A Group of Ministers, chaired Meghalaya Chief Minister Conrad Sangma, in December last year submitted a report on GST on online gaming to Finance Minister Nirmala Sitharaman.
The GoM had agreed on a 28 per cent GST on online gaming. However, in the absence of consensus on whether the tax should be levied on only the fees charged by the portal or the entire consideration, including the bet amount, received from participants, the GoM had decided to refer all suggestions to the GST Council for a final decision.
Charging 28 per cent GST on the entire amount, which a player deposits for a game for both categories of online game, would reduce the prize money left for distribution and drive away players from legitimate tax-deducting portals. This may also encourage online gamers towards unlawful portals that do not deduct tax, sector experts had said.
Online gaming witnessed a spurt during the Covid lockdown, with the number of users in India rising substantially. As per a KPMG report, the online gaming sector would grow to Rs 29,000 crore by 2024-25, from Rs 13,600 crore in 2021.
The vexed issue of levying Goods and Services Tax (GST) on online games was hanging fire for nearly two years now with many states pitching for a lower tax rate on those online games which require a skill. They are of the opinion that games of skill should not be treated on par with games of chance.
The absence of a clear definition often leads to tax notices being sent to online game portals and subsequent litigations.
The Group of Ministers in its earlier report submitted to the Council in June 2022, suggested a 28 per cent GST on the full value of the consideration, including the contest entry fee, paid by the player, without making a distinction, such as games of skill or chance. However, the Council had asked the GoM to reconsider its report.
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