The Union Finance Minister Nirmala Sitharaman announced that GST Council has agreed to levy a 28 percent tax on online gaming, casinos, and horse racing. Nirmala Sitaraman emphasized the point that the tax on online gaming companies would be assessed on the entire value without making any differentiation based on whether the games required expertise or proficiency in the field or were simply based on serendipity.
In her statement, she very well stressed “We have offered exemption on GST for satellite launch services provided by private organizations. Online gaming, horse racing, and casinos will be taxed at 28 percent (all three activities) and they will be taxed on full face value”.
Goods and Services Tax was introduced in the country in July 2017, when India adopted a binary GST model, meaning that taxation is administered by both the Union and state governments. Transactions made within a single state are levied with Central GST (CGST) and State GST (SGST by the State governments. And the states were assured compensation for loss of any revenue arising on account of its implementation as per the provisions of the GST Act, 2017 for a period of five years.
The GST Council has also decided to liberate GST on the import of drugs and medicines used to treat rare diseases while the rates on raw or unfried extruded snack pellets, fish soluble paste, and imitation zari threads have been brought down to 5 percent.
The decision is not in favor of companies that have been opposing 28% GST on online games. A group of some of the biggest online gaming companies represented by the FICCI Gaming Panels prompted the Central Board of Indirect Taxes & Customs not to put the GST rate for the sector to 28 percent. They have said it would be “Extremely detrimental to the survival of the online gaming industry as no business operations can survive with similar high taxation”
