Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Agarwal has announced that India is set to implement a 28% rate of Goods and Services Tax (GST) on online gaming from 1 October.
This move comes with the consensus of all states in India and follows the recent passage of amendments to the GST laws in the Lok Sabha. Players must now pay GST on the full value of their initial purchase of in-game currency. Simply put, the individual will pay Rs 28 of the first Rs 100 spent on the game, which is 28%.
Under the GST regime, online gaming is differentiated between skill and chance. A game of skill requires the skill and experience of the player, while a game of chance is simply gambling or gambling, assuming the risk of losing. In India, poker, rummy and horse racing betting are considered games of skill, while blackjack, roulette, sports betting and the like are games of chance. However, in the case of the tax payable, the same rates will be equally applicable to both types of games.
However, this 28% GST is not applied to your profits. You have to pay GST while depositing money on a gaming or betting platform. You pay 30% TDS on your earnings.
Players have been told that the full tax will be collected at the entry level only, and that no tax will be applied to winnings used later in the game. However, the tax collected will not be refunded in case players receive a cash refund or cashback.
A popular fantasy gaming company has found a solution: it offers a bonus code that gives users exactly a discount on the amount of their taxes (28%). Creative solutions like these could be the answer to the continued growth of the real money online gaming market in India. Most offshore casino sites already offer really good online casino welcome bonuses to new players. But when GST is also applied to their deposits (which is not happening yet), they can also start offering additional bonuses and promotional codes to incentivize the customer.
Industry insiders are understandably unhappy about this. Experts maintain that games of skill should not be grouped with betting or games of chance. Some say this will reduce the expansion of gaming companies by a significant margin. As of now, offshore betting sites and online casinos do not have to pay 28% GST because the online gambling market in India remains unregulated. But there has recently been talk of levying taxes on offshore betting companies, and it may soon be underway.
While it is not 100% illegal to play at offshore betting sites that are licensed outside of India, it is not considered the safest or smartest option. Because there is no legal recourse in case of fraudulent activities. If the market were regulated, things would be very different.
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Source: vtt.edu.vn