In a press conference, Revenue Secretary Sanjay Malhotra announced that the Goods and Services Tax ( GST ) Council will evaluate the decision to impose a 28 percent GST on the full face value of online gaming after March 31. The review is anticipated to take place in the upcoming GST Council meeting, likely scheduled later this month.
Malhotra clarified that a review does not necessarily imply a change in rates but is intended to assess the current scenario and determine if any adjustments are required. The GST Council had previously revised the tax rate on online gaming from 18 percent to 28 percent on full face value, effective October 1, 2023.
Since the implementation of the revised tax rates, the sector has witnessed a substantial increase in revenue, experiencing nearly a six-fold rise. Malhotra disclosed that in the last three months alone, GST revenue from online gaming companies has surged from Rs 605 crore to Rs 3,470 crore, projecting an estimated collection of over Rs 7,000 crore in the current fiscal year and Rs 14,000 crore in the next fiscal year ( FY25 ).
Under the new tax regime introduced on October 1, 2023, players are required to pay 28 percent GST on the face value of every deposit made on an online gaming platform. Notably, the taxation is based on the deposit duration, irrespective of the actual gaming time. If a player withdraws and deposits multiple times in a month, the 28 percent GST is applicable with each deposit, resulting in a higher tax incidence.
Malhotra emphasized that the GST Council’s decision regarding online gaming taxation will be a crucial factor in determining the government’s GST revenue. If the current tax rate is maintained, the government is expected to generate significant revenue, surpassing Rs 7,000 crore in FY24 and reaching Rs 14,000 crore in FY25, compared to Rs 1,600 crore in the fiscal year 2022-23. The review process will play a pivotal role in shaping the future taxation landscape for the burgeoning online gaming industry.
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