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The GST Council on Wednesday deferred the decision on imposing 28% goods and services tax (GST) on casinos, online gaming, and lottery. The Group of Ministers (GoM), formed under the orders of the GST Council, will submit the report on the issue after 15 days.

The decision has been deferred because there are issues that need to be discussed, Karnataka Chief Minister BS Bommai said, as per media reports. Hence, the GoM led by Meghalaya Chief Minister Conrad Sangma has been given another 15 days to work on the issues.

The GoM had recommended that in the case of online gaming, the activities should be taxed at 28% on the full value of the consideration, including the contest entry fee paid by the player for participation in such games. It also recommended that no distinction should be made such as games of skill or chance for levying 28% GST.

Earlier, the online gaming industry had approached the GoM to reconsider its decision. The industry raised a number of concerns regarding the hike in GST rate to 28% from the existing 18%. 

Last year, the GoM was set up by the Ministry of Finance to look into matters related to the GST regime covering online gaming, casinos and race courses. 

Industry experts also raised concerns about not making a distinction between skill-based gaming and real-money gaming. The industry has always emphasised the demarcation between skill and monetisation-based games. Looking at skill-based games, such as Ludo, Poker, Rummy, through the same lens as betting, gambling, and horse-racing games would hinder the growth of industry, experts said. 

Currently, a 28% GST rate is only applicable on online games involving betting or gambling, while a tax rate of 18% is levied on the commission collected by online gaming platforms for games not involving betting or gambling. 

According to a FICCI and EY report, the online gaming segment in the country reached INR 101 Bn in 2021 with a 28% growth. Online gamers grew 8% from 360 million in 2020 to 390 million in 2021. 

Interestingly, real-money gaming comprised over 70% of segment revenues. As per the report, the number of online gamers in the country is expected to reach 500 million by 2025, making it the fourth-largest segment of the Indian media and entertainment sector.