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Online gamers brace for 28% tax hike as GST council meets.
The GST Council will hold a virtual meeting on Wednesday (2 August). Union Finance Minister Nirmala Sitharaman, who chairs the Council, will preside over the meeting.
Today's gathering is critical for individuals in the online gaming industry. The GST Council previously resolved to apply a standard 28% tax on full face value for internet gambling, casinos, and horse racing. As a result, the major online gaming businesses and their CEOs have continued to ask the government to reverse the decision, fearing that it will stifle the growth of new-age entrepreneurs.
As a result, the Group of Ministers will debate and vote on the plan to collect a 28% GST on internet gambling, casinos, and horse racing on Wednesday.
GST on Online Gaming
The GST Council authorized a 28% tax on the entire face value of bets in online gambling, casinos, and horse racing on July 11th.
As a result, the Law Committee, comprised of Centre and state tax authorities, has drafted draught regulations for the GST Council to examine regarding the computation of supply value for tax purposes.
The committee has proposed a new regulation that would define the value of online gaming supply as the entire amount deposited with online gaming platforms in the form of virtual digital assets or money or on behalf of the player.
The committee has suggested that the supply value in casinos be the amount a player pays to purchase tokens, coins, chips, or tickets.
The council will meet virtually on Wednesday to debate the committee's recommendations.
The GST Council's judgment was described as "unconstitutional, irrational, and egregious" by the All-India Gaming Federation (AIGF), which represents firms such as Nazara, GamesKraft, Zupee, and Winzo.
In a letter to Sitharaman, gamers from Tier II and Tier III cities under the auspices of 'Indian Gamers United' stated that excessive taxes would drive players to illegal and offshore platforms where no tax is charged, but the gamers face a significant risk.
The organization also advocated for a separation between games of chance, such as gambling, and games of skill, such as gaming.
Gaming is a skill-based activity that cannot be lumped in with games of chance like gambling and horse racing; hence taxes must be reconsidered and made tax-friendly, according to 'Indian Gamers United' in a statement.
The GST Council's 51st Meeting: Key Expectations
The Council expects to approve a precise definition of actionable claims.
The GST Council's definition of online gaming may include online money gaming.
The GST Council is expected to define online gaming as "those provided via the internet or e-network, including money gaming."