Online gaming industry in India has received show-cause notices amounting to Rs 1 lakh crore. According to the sources, the notices come even as the industry has raised concerns on the applicable GST Rates.It is to be noted here that a 28% GST rate should have been in place starting from October 1, according to the law.The law was changed by the GST Council in August 2023 to explicitly state that all online games with bets, regardless of skill or chance, will be subject to a 28% GST rate on the whole value of the bets placed as of October 1. This explanation was intended to fill any remaining gaps.Following agreement among all Indian states, India is poised to adopt this 28% GST rate on online gambling, according to Sanjay Agarwal, Chairman of the Central Board of Indirect Taxes and Customs (CBIC). This change in taxation was made possible by the Lok Sabhas modifications to the GST laws.It is to be noted here that the Lok Sabha passed amendments to two Goods and Service Tax (GST) laws, during the last monsoon session of the Parliament. These amendments primarily aimed to introduce a 28% GST rate for online gaming, casinos, and horse racing.The amendments aimed to streamline the taxation of online gaming, casinos, and horse racing with the GST Councils resolution from August 2.In addition to this, to ensure the compliance, the GST Council also recommended adding specific provisions to the Integrated Goods and Services Tax (IGST) Act, 2017.Indias endeavour to tax online gaming falls within the broader efforts to bring various sectors under the GST framework, ultimately aiming to streamline tax collections and clarify tax rates for these growing industries.
