Online Games Could Soon Levy Higher GST; FinMin Planning to Classify Them as Games of Skills, Chance
The Finance Ministry is considering classifying online gaming into categories of skill and chance, and levying a differential rate of GST, an official said.
Online games where winning is dependent on a certain outcome or is in the nature of betting or gambling would attract 28 percent Goods and Services Tax (GST), while those which involve some amount of skill could be taxed at a lower 18 percent.
A final decision on the taxation on online gaming would be taken by the GST Council in its next meeting, which is likely in May or June.
"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," the official told reporters here.
The task would be to differentiate between what should be a game of skill and what can be called a game of chance.
Currently, online gaming attracts 18 percent GST. The tax is levied on gross gaming revenue, which is the fees charged by online gaming portals.
A Group of Ministers, chaired by Meghalaya Chief Minister Conrad Sangma, in December last year submitted a report on GST on online gaming to Finance Minister Nirmala Sitharaman.
The GoM had agreed on a 28 percent GST on online gaming. However, in the absence of consensus on whether the tax should be levied on only the fees charged by the portal or the entire consideration, including the bet amount, received from participants, the GoM had decided to refer all suggestions to the GST Council for a final decision.
Charging 28 percent 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 and drive away players from legitimate tax-deducting portals. This may
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