The GST Council announced the decision during its 50th meeting, emphasizing the importance of legal compliance in the tax system. The implementation date for the new tax rate has not been confirmed yet, as amendments to existing legislation will be required to accommodate the changes. Under the revised tax system, a turnover-based tax will be applied to the full-face value of bets instead of the gross gaming revenue (GGR).
For every Rs100 (£0.93/€1.08/$1.22) spent by a consumer, the operator will be liable to pay Rs28 in tax. In the case of online gambling, the tax will be applied to the total value of all bets placed with operators. Land-based casinos will be subject to the tax based on the face value of the chips purchased at each venue. Horse racing bets placed with bookmakers and totalisators will also be subject to taxation based on their full value.
The issue of whether the tax should be levied on turnover or GGR was a topic of debate. A group of ministers (GOM) submitted a report prior to the 50th GST Council meeting, recommending that the council make the final decision. The council ultimately chose to apply the tax on the full-face value of bets.
The GST council, consisting of the Union Finance minister and representatives from all states and union territories across India, holds the authority to determine tax rates, exemptions, and administrative procedures.
The All India Gaming Federation (AIGF), the apex industry body for online gambling in India, reacted negatively to the news. In a statement, the AIGF expressed concerns that the tax rate would negatively impact businesses and potentially drive players towards unlicensed operators. The AIGF believes that the tax rate could lead to significant job losses and hinder the growth of the industry.
The implementation of this new tax rate follows the introduction of new regulations for India’s online gambling market earlier this year. The regulations require online gaming businesses to operate within the confines of existing laws, including state-wide gambling bans. The government proposed the establishment of self-regulatory bodies composed of industry representatives, players, experts, and government nominees to oversee the industry and ensure compliance with standards.
