Government to Impose 28% Tax on Online Gaming from October 1

The Central government is all set to impose a 28% tax on online gaming, effective from October 1, said by Finance Minister Nirmala Sitharaman. 

The decision was made during a meeting of the Goods and Services Tax (GST) council, with discussions focusing on the amendments needed for taxing online gaming.

According to Sitharaman, the valuation of supply for online gaming and actionable claims in casinos will be based on the amount paid or payable to the supplier by the player, excluding the amount entered into the games and bets out of previous winnings. The tax will not be levied on the total value of each bet placed, as initially proposed during the previous meeting.

However, state legislators had conflicting views on whether or not to impose a tax on online gambling. The Finance Minister of Delhi was against the tax, while Goa and Sikkim advocated for charging the GGR rather than the nominal amount.

The vote follows a previous council meeting in which a GST of 28% was suggested to be applied to the whole face value of all wagers. The recent gathering's purpose was to iron out the last few kinks in enforcing this online gaming tax.

The decision would be revisited six months after it is put into place, the Minister of Finance emphasised. The move is being watched for how it affects the online gaming business and people's propensity to gamble.

However, Revenue Secretary Sanjay Malhotra emphasised that betting is already liable to GST and the new tax will not legalise online games in states where they are banned. Online gaming and gambling are still considered illegal activities, and taxing them will not change their legal status.

The Finance Minister and state representatives make up the GST council, whose mission is to standardise and control taxation across the country. Concerns about the social and fiscal effects of the booming digital gaming sector led to the decision to impose taxes on online gambling.

The government has set the implementation date for the new tax on online gaming as October 1, and it plans to carefully monitor the effects of the tax and make any required adjustments depending on the review after six months. 

The decision is being interpreted as an effort to reduce the social costs of online gambling while also boosting tax income.

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