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28% GST in Gaming Sector UPSC NOTE

 


  • The 50th GST Council meeting decided to impose a 28% tax on online gaming, including casinos and horse racing.

  • The objective was not to harm the industry but to address the moral question of providing greater encouragement to non-essential goods compared to the gaming industry.

  • The aim of the decision was to simplify the taxation process, eliminate complexity, and promote transparency.

  • Under the new taxation scheme, online gaming platforms will be taxed at 28% on the full-face value of the placed bets.



  • Previously, the gross gaming revenue (GGR) was taxed at 18%, but now the tax will be levied on the entry bet at 28%.

  • This change will reduce the available resources for the prize pool and pose a disincentive for the industry, considering the existing 30% taxation on users' final winnings.

  • Industry experts, such as the E-Gaming Federation and All-India Gaming Federation, express concerns about the decision's impact on the viability of the online gaming industry and its growth trajectory.


  • The online gaming industry has shown significant growth, attracting foreign direct investments (FDI) and contributing to the Indian economy.

  • The steep rise in GST is expected to discourage both domestic and foreign investors, potentially hindering the industry's growth and investment prospects.

  • The government's inclusion of online gaming and horse racing in Schedule-III of the Central Goods and Services Tax Act will categorize them as taxable actionable claims, grouping them with gambling activities.

  • The distinction between games of skill and games of chance is being revisited, with the government classifying online gaming under taxable claims.

  • The classification of games often relies on state legislation and court judgments, with online gaming being considered a skill-based activity protected as a fundamental right under the Constitution.

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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: 28% GST in Gaming Sector UPSC NOTE
28% GST in Gaming Sector UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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