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Published: July 12, 2023
Updated: July 12, 2023

GST Council Approves 28% Tax Rate on Online Gaming, Casinos, and Horse Racing; Lowers Tax on Cinema Food and Beverages

Tax Changes for Online Gaming, Casinos, and Horse Racing

The Goods and Services Tax (GST) Council recently made significant decisions concerning the taxation of various sectors in India. One of the key highlights is the approval of a uniform 28% tax rate on the full "face value" of bets associated with online gaming, casinos, and horse racing. This decision aims to bring these activities on par with betting and gambling in terms of taxation.

Lower Tax on Cinema Food and Beverages:

In a move to provide relief to moviegoers, the GST Council decided to lower the service tax levied on food and beverages consumed at cinema halls. The tax rate has been reduced from 18% to 5%, making it more affordable for people to enjoy refreshments while watching movies.

Tweaked Definition of Sports Utility Vehicle (SUV):

The Council also made changes to the definition of Sports Utility Vehicles (SUVs) for the purpose of levying a cess on top of the GST rate. The previous criteria included popular perception as an SUV, length of 4 metres or above, engine capacity of 1,500 cc and above, and unladen ground clearance of minimum 170 mm. However, the Council decided to remove the condition of popular perception and emphasised that the ground clearance requirement should be applicable to an unladen vehicle.

Amendments to GST Law for Online Gaming and Horse Racing:

To implement the tax rate change on online gaming and horse racing, the finance ministry plans to introduce amendments to the GST law. Currently, most online gaming platforms pay an 18% tax on the commission collected per game, while betting and gambling attract a 28% GST. The new tax rate of 28% will be applicable to the full face value of chips purchased in casinos and the total value of bets placed on horse racing. Online gaming and horse racing will be included in Schedule III as taxable actionable claims.

Strengthening Measures Against Tax Evasion and Fake Registration:

The GST Council has approved measures to combat excess input tax credit claims by businesses and strengthen the registration process to tackle the issue of fake registrations. These steps aim to ensure fair and transparent taxation and protect the integrity of the GST system.

The decisions taken by the GST Council regarding taxation on online gaming, casinos, horse racing, cinema food and beverages, and the definition of SUVs showcase the government's efforts to bring about tax reforms and streamline the GST framework. The changes will not only ensure a level playing field for various sectors but also benefit consumers and curb tax evasion. The amendments to the GST law will facilitate the implementation of the revised tax rates for online gaming and horse racing, promoting fairness and consistency in the taxation of these activities.