Valuation rules for GST on e-gaming platforms effective prospectively: FM

New Delhi: Union Finance Minister Nirmala Sitharaman addresses during 'Iconic Week Celebration' of the Ministry of Finance, in New Delhi, Tuesday, June 7, 2022. (PTI Photo/Vijay Verma)(

This implies that bets placed from the winning amount on online gaming portals will not attract 28 per cent Goods and Services Tax (GST) with effect from October 1.


Finance Minister Nirmala Sitharaman on Tuesday said the valuation rules for levying 28 per cent GST on entry-level bets on online gaming platforms are effective prospectively.


“The clarification on that (online gaming) was issued. 28 per cent is the tax and as to who it will apply to and on whom the incidence will fall is clearly explained… The valuation rules to exclude winnings is prospective. So, I hope there is not confusion on that,” Sitharaman said in the Lok Sabha.


The minister was replying to a discussion in the House on the GST (Second Amendment) Bill, which provides for capping the age limit for president and members of GSTAT.


This implies that bets placed from the winning amount on online gaming portals will not attract 28 per cent Goods and Services Tax (GST) with effect from October 1.


In its meeting in August, the GST Council had clarified that 28 per cent GST is applicable on online gaming.


Thereafter, amendments to Central GST Act were cleared by Parliament in August to give effect to the decision of the Council. The effective date for the amendments was October 1.


The amendments provide that GST will be levied on entry-level bets on online gaming platforms and not on what players pay in each game from the winning amount.


Giving an example, the minister said if a bet is placed for, say Rs 1,000, and the player wins Rs 300, then if the player again places a bet of Rs 1,300, then GST will not be levied on the winning amount.


In September, GST field officers sent notices of over Rs 1.12 lakh crore to a host of online gaming companies for alleged short payment of taxes.


Such companies have approached the court and the matter is sub judice.

To a question in the Rajya Sabha on the amount of tax evasion and number of showcause notices issued to online gaming companies, Minister of State for Finance Pankaj Chaudhary had said on December 5, “71 show cause notices involving GST to the tune of Rs 1,12,332 cr have been issued to online gaming companies during financial years 2022-23 and 2023-24 (up to October 2023).”

“As these notices are pending adjudication, the respective GST demand is not yet determined under the provisions of CGST Act, 2017,” he said.

First Published: Dec 20 2023 | 12:10 AM IST

Finance Minister Nirmala Sitharaman has clarified that the valuation rules for levying a 28% Goods and Services Tax (GST) on entry-level bets on online gaming platforms will be effective from October 1. This means that bets placed from the winning amount on online gaming portals will not attract the 28% GST. Sitharaman made this announcement while addressing the Lok Sabha during a discussion on the GST (Second Amendment) Bill. The bill includes provisions to cap the age limit for the president and members of the GSTAT. The clarification comes after the GST Council had previously clarified in August that 28% GST is applicable to online gaming. Amendments to the Central GST Act were passed in Parliament to give effect to this decision, with the amendments taking effect from October 1. The amendments state that GST will be levied on entry-level bets on online gaming platforms and not on the amount players pay in each game from their winnings. The minister also mentioned that notices of over Rs 1.12 lakh crore have been sent to online gaming companies for alleged short payment of taxes, and these companies have approached the court regarding the matter. In Rajya Sabha, Minister of State for Finance Pankaj Chaudhary stated that 71 show cause notices involving GST to the tune of Rs 1,12,332 crore have been issued to online gaming companies during the financial years 2022-23 and 2023-24 (up to October 2023). These notices are still pending adjudication.

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