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The Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state ministers, in its last meeting on July 11 approved levying 28 per cent tax on full face value of bets in online gaming, casinos and horse racing.
Subsequently, the Law Committee, comprising Centre and state tax officers, have prepared draft rules for consideration of the GST Council with regard to computation of supply value for tax purposes.
The committee has suggested insertion of a new rule under which value of supply of online gaming would be the total amount deposited with the online gaming platforms by way of money or virtual digital assets on behalf of the player.
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The council will discuss the committee’s recommendations in a virtual meeting on Wednesday.
The All India Gaming Federation (AIGF), which represents companies like Nazara, GamesKraft, Zupee and Winzo, had termed the decision by the GST Council as ”unconstitutional, irrational, and egregious”.
Gamers from Tier II and Tier III cities under the aegis of ‘Indian Gamers United’ in a letter to Sitharaman has said that high taxation will push the gamers towards illegal and offshore platforms where no tax is payable but will put the gamers into a very high risk.
Responding to a query on how the GST authorities will tax the online gaming companies operating from overseas location, Minister of State for Finance Pankaj Chaudhary said there are sufficient enforcement provisions in GST laws to take action against such platforms who default in paying taxes.
”Sufficient enforcement provisions exist to take action against offshore platforms, which do not pay prescribed GST,” Chaudhary said in a written reply in the Rajya Sabha.