India's Goods and Services Tax (GST) Council decided on August 2 to impose a 28% levy on the full face value of bets placed on online gaming, casinos and horse racing, keeping to a decision it had reached at an earlier meeting and aiming to implement it from October 11. The Council, which is made up of the finance ministers of the central government and the states, met in New Delhi under Finance Minister Nirmala Sitharaman1.
The Council approved amendments to the law to include online gaming, casinos and horse racing as taxable actionable claims, and clarified that such supplies would attract 28% tax on full bet value2. Under the changes to the Central GST Act, these supplies are treated as "actionable claims" similar to lottery, betting and gambling and are subject to 28% GST on the full face value of bets2. The amendments to the Integrated GST Act make it mandatory for offshore online gaming platforms to take registration in India and pay taxes in accordance with domestic law2.
Sitharaman gave an example of how the valuation works: if someone enters a casino by buying chips worth ₹1,000, plays a round and wins ₹300, the tax will not be levied on ₹1,300, but on the entry amount of ₹1,000 alone1. The E Gaming Federation and Federation of Indian Fantasy Sports said in a joint statement that this would address their concerns of "repeat taxation", while adding that the framework "will lead to a very burdensome 350% increase in GST and set the Indian online gaming industry back several years"1.
Sikkim and Goa dissented over the modalities of the tax for casino users, wanting the 28% levy on casino bets to apply on gross gaming revenue and not the entire face value1. Tamil Nadu's finance minister raised concerns about the levy's impact on the state-wide ban on online gaming, which Sitharaman said would be addressed in the language of the new norms to explicitly state the tax cannot be levied where a ban is in place1.
"Because Goa and Sikkim [who wanted the 28% levy on casino bets to apply on gross gaming revenue and not the entire face value] kept appealing that they were small States and needed consideration, the Council agreed to come back after six months after implementation to review the way in which this is getting implemented"
Revenue Secretary Sanjay Malhotra said the changes are not retrospective per se but are more in the nature of a clarification because betting, gambling and lottery are already included as actionable activities under the GST law1. The High Court of Karnataka dismissed a ₹21,000 crore tax demand against Gameskraft Technologies, and the Revenue Department filed a special leave petition on the matter, with Sitharaman saying "whatever the Supreme Court decides, will prevail"1.
What it means for players
The tax is levied on the operator's supply, calculated on the full face value of bets, not on a player's net winnings2. For a casino visit, the example given by the Finance Minister indicates the levy applies to the amount used to buy chips at entry, not to the total of that amount plus any winnings from a round1. Offshore online gaming platforms must register in India and pay tax under domestic law2. Where a state has a ban on online gaming in place, the tax cannot be levied, according to the clarification described by Sitharaman1. How operators pass any of this through to players in the form of pricing, entry amounts or charges has not been reported.
What happens next
Parliament passed amendments to the Central GST and Integrated GST laws to give effect to the Council's decision2. The Finance Ministry notified October 1 as the appointed date for implementation of the amended provisions2. States must also amend their own GST laws for the new tax to take effect1. A review of the implementation was proposed after six months, in April 20242. Malhotra indicated the review's scope would likely be limited to valuation and tax rate issues, which can be changed through notifications and rules1.
For background on how operator taxes reach players, see Betting Duty, GST and Casino Tax: How Operator Taxes Reach Players and Tax on Gambling Winnings in Asia: A Guide for Players, Visitors and Expats. For the rules in the region, see Gambling Laws in Asia: What Is Legal in 12 Jurisdictions.
