GST Council to review online gaming after March 31: Revenue Secretary

Revenue Secretary Sanjay Malhotra announced that the GST Council will reconsider the imposition of a 28 percent Goods and Services Tax (GST) on the full face value of online gaming, but not until after March 31. He clarified that the review will not occur during the upcoming meeting due to the expiry of the six-month period on March 31, suggesting that it may be addressed in subsequent gatherings, likely later in February.

Malhotra emphasized that a review does not necessarily entail altering the rates, but rather aims to assess the situation and determine if any adjustments are warranted. The GST Council had previously increased the tax rate on online gaming from 18 percent to 28 percent on the full face value, effective October 1, 2023, resulting in a significant surge in revenue from the sector.

The Revenue Secretary highlighted that the government stands to gain a substantial portion of GST revenue from online gaming if the current tax rate remains unchanged. He projected GST revenue of over Rs 7,000 crore in FY24 and Rs 14,000 crore in FY25, compared to Rs 1,600 crore in 2022-23. Malhotra noted that since the implementation of the revised tax rates three months ago, GST revenue from online gaming companies has surged from Rs 605 crore to Rs 3,470 crore, translating to an annual addition of approximately Rs 12,000 crore.

Under the revised tax regime effective October 1, 2023, a 28 percent GST is applicable on the face value of every deposit made by a player on an online gaming platform. Importantly, the taxation is based on the deposit duration rather than the gaming time. If the same amount is deposited multiple times in a month, the tax is levied each time, resulting in a high tax incidence.