The all-powerful Goods and Services Tax (GST) Council will meet in Delhi on July 11 and will likely take up the taxability issue of online gaming and resolve it.
The tax treatment of online gaming firms has been pending for some time. The GST Council had tasked a state minister panel headed by Meghalaya Chief Minister Conrad Sangma but could not arrive at a consensus when it submitted the report in December.
In its report, the panel held to its earlier position of 28 per cent tax rate on the full value, including winnings. Since the panel failed to reach a conclusion, it had referred the matter back to the Council.
“Some of the states are not in favour of treating them on par with betting and gambling. Also, they are of the view that tax rates should not be high as it would discourage technology-driven games,” a government official privy to the discussion said.
Sources said that although the state panel agreed to tax the supply of actionable claims at 28 per cent, it could not decide whether the levy should be on the net amount (after removing prize money) or gross gaming revenue (GGR).
GGR is the total amount collected by casinos and online gaming companies before paying out money to winners. The panel is learnt to have considered the implications of the earlier proposal of taxing on face value and gross revenue.
It was argued that the financial implications of subjecting GST on GGR were substantial. Taxation of online gaming or casinos at GGR creates a huge distortion in terms of tax differential between lottery (face value taxation) and these activities.
In the case of casinos, the empowered group of ministers had earlier recommended charging the highest GST rate of 28 per cent on the full face value of chips or coins purchased by a player. The chips may be used for buying items such as food and beverages as well. However, Goa objected to the proposal.
Source: Business Standard
https://www.business-standard.com/economy/news/gst-council-to-meet-in-delhi-on-july-11-may-resolve-online-gaming-issue-123061501093_1.html
https://www.business-standard.com/economy/news/gst-council-to-meet-in-delhi-on-july-11-may-resolve-online-gaming-issue-123061501093_1.html
