The finance ministry is considering classifying online gaming into categories of skill and chance, and, therefore, levying a differential rate of GST, a report said. A decision on the taxation on online gaming will be taken by the GST Council in its next meeting, which is expected to take place in May or June.
As per a report by news agency PTI, in the case of an online game where winning is dependent on a certain outcome or the game is in the nature of betting or gambling, it would attract 28% GST. In case an online game which involves some amount of skill could be taxed at a lower 18%.
“All online games are not games of chance and are not in the nature of betting or gambling. The finance ministry will be presenting its view before the council,” an official was quoted as saying.
It is to be noted that online gaming currently attracts 18% GST. The tax is levied on gross gaming revenue, which is the fees charged by online gaming portals.
Meeting to decide tax rate
A group of ministers, which was chaired by Meghalaya chief minister Conrad Sangma, submitted a report on GST on online gaming to Finance Minister Nirmala Sitharaman, in December last year.
The group had agreed on a 28% GST on online gaming, however, there was not any consensus on whether the tax should be levied on only the fees charged by the portal or the entire consideration, which includes the bet amount, received from participants.
What experts have to say
Citing experts, the report said that charging 28% 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.
This could also drive away players from legitimate tax-deducting portals.
Online gaming witnessed growth during the Covid-19 lockdown. As per a report by KPMG, the online gaming sector would grow to Rs 29,000 crore by 2024-25, from Rs 13,600 crore in 2021.
As per a report by news agency PTI, in the case of an online game where winning is dependent on a certain outcome or the game is in the nature of betting or gambling, it would attract 28% GST. In case an online game which involves some amount of skill could be taxed at a lower 18%.
“All online games are not games of chance and are not in the nature of betting or gambling. The finance ministry will be presenting its view before the council,” an official was quoted as saying.
It is to be noted that online gaming currently attracts 18% GST. The tax is levied on gross gaming revenue, which is the fees charged by online gaming portals.
Meeting to decide tax rate
A group of ministers, which was chaired by Meghalaya chief minister Conrad Sangma, submitted a report on GST on online gaming to Finance Minister Nirmala Sitharaman, in December last year.
The group had agreed on a 28% GST on online gaming, however, there was not any consensus on whether the tax should be levied on only the fees charged by the portal or the entire consideration, which includes the bet amount, received from participants.
What experts have to say
Citing experts, the report said that charging 28% 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.
This could also drive away players from legitimate tax-deducting portals.
Online gaming witnessed growth during the Covid-19 lockdown. As per a report by KPMG, the online gaming sector would grow to Rs 29,000 crore by 2024-25, from Rs 13,600 crore in 2021.
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