GoM Seeks Legal Opinion on Differently Taxing Online Games of Skill

The group of ministers (GoM) formed to decide the levy of Goods and Services Tax (GST) on online gaming, casinos, and horse racing is planning to separate the online games of skill from games of chance. However, a few GoM members pointed out that differential GST rates may result in fresh litigation amid no standard definition for games of skill.

Hence, the committee headed by Meghalaya Chief Minister Mr Conrad Sangma met recently and approached the law committee on the legal aspect of such differential treatment. The move of seeking legal opinion after online gaming companies submitted several court orders that distinguish games of skill from games of chance.

Earlier, the GoM recommended a levy of 28% GST on gross gaming revenue for online gaming, and the Council expected the final report by 10th August 2022. However, it sought more time to submit its final recommendations.

Sources say that the issue is not on the levy. It is on the legality of merging both games of skill and games of chance as betting. Therefore, it is mandatory for GoM to take a legal opinion before the final submission and to avoid any future legal dispute.

Last month, the gaming industry representatives met finance ministry officials and explained why the government should tax games of skill differently. Also, the industry argued that online games of skills are protected under Article 19(1)(g) and Article 301 of the Constitution of India.

Council expects the report to be submitted before 10th September, 2022. However, the same is dependent on getting legal clarity. 

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in

You May Also Like

Taxation of dividend income received on or after 1 April 2020 (FY 2020-21)

You may receive a dividend from your equity or mutual fund investments.…

Know the taxation rules for income F&O trading

Futures and options are stock derivatives that are traded in the stock…

Important Cash Transaction Limits and Penalties Under Income Tax That You Need to Know About

In India, there are a lot of transactions that go unaccounted for,…

What is the TDS provision for rent paid by individuals above Rs 50,000?

Many people are unaware of TDS provisions while paying rent on the…