GST Council likely to define online gaming, virtual digital assets tomorrow

Taking forward its decision to impose 28% GST on the full value of the transactions in online gaming, the GST Council in its 51^st meeting scheduled tomorrow is likely to deliberate on the definition of ‘online gaming’ and ‘online money game’ for the purpose of taxation.

Clarifications and clear definitions of various aspects of monetary bets, deposits, use of digital virtual assets in the gaming ecosystem are also likely to be taken up by the Council in the meeting tomorrow.

“Definitions will be deliberated upon so that there is no legal loophole. Deliberations are also likely to pertain to the use of virtual digital asset in the gaming ecosystem and the manner in which it could be brought under the tax net as part of the GST laws,” said a source.

It may be noted that on July 11, the GST Council – which is the apex body on the GST matters -- unanimously decided to bring online gaming, horse racing and casinos under the 28% GST bracket. The slab applies uniformly to both skill based games and chance based games. Ever since then the gaming industry has been up in arms, and has sent multiple representations to the finance ministry as well as the Prime Minister Office.

“The GST council’s recommendation on taxing online games at 28% is after a lot of deliberation. The simple intent is to avoid any dispute and levy blanket rules on all gaming activities. It’s very unlikely that it would be reconsidered despite the chaos created by the gaming industry,” said Ankur Gupta, Practice Leader (Indirect Tax) SW India.

Amendments to the GST laws making online gaming as taxable action subject to claim will also be discussed by the council. It may be noted that on July 11, the GST Council – which is the apex body on the GST matters -- unanimously decided to bring online gaming, horse racing and casinos under the 28% GST bracket, with the tax slab applying uniformly to both skill based games and chance based games.

“The online gaming sector in India is poised to become a $5 billion industry by 2025 from around $3 billion. The user base is also expected to grow to 500 million user base from the current around 450 million,” said Gupta.