Any hopes of a reduction, leave alone a rollback, of the 28 per cent goods and services (GST) tax on online gaming have virtually been extinguished with the revenue bonanza that has resulted from the levy since October 1, 2023.
GST authorities have collected over Rs 6,909 crore, a 412 per cent increase in online gaming revenue over the past six months alone. Additionally, casino revenue grew by 30 per cent during this period, further reinforcing the decision to maintain the 28 per cent rate GST on both skill-based and chance-based online games.
Sources have told Business Today that no state, including even casino-heavy Goa, opposed the 28 per cent GST levy during the six-hour-long meeting of the GST Council in New Delhi on Monday.
“There was no opposition from any state, including Goa,” an official said, adding the Council did not discuss any rollback or reduction of the tax on online gaming, casinos, or even horse racing.
The Council also refrained from addressing outstanding tax liabilities of the online gaming sector. Companies have expressed concerns about tax dues totalling Rs 1.5 lakh crore, with casino tax liabilities reported to exceed ten times their annual revenue.
Revenue Secretary Sanjay Malhotra confirmed at a press briefing that no discussions were held on the outstanding tax dues, as the matter remains under judicial consideration. “We await the court's decision,” Malhotra said.
Additionally, the Finance Ministry proposed a new Section 11A to the CGST Act during the 53rd council meeting, which would allow the government to "not recover GST that was not levied or under-levied due to general practice." However, this proposal may not apply to show-cause notices issued to online gaming companies before July 2023, potentially disappointing many in the industry.
The decision to increase the tax rate from 18 per cent to 28 per cent on skill-based games, announced in August 2023, was met with significant concern from the gaming industry. However, the tax has proven a game-changer for revenue collections for both the Centre and states.