Introduction: This article provides insights into the Indian Government’s decision to levy a 28% Goods and Services Tax (GST) on online gaming websites. It explains the motives behind the decision, its potential impact on the online gaming industry, the expected tax revenue, and whether any states opposed this decision in the GST Council.

Introduction: This article provides insights into the Indian Government's decision to levy a 28% Goods and Services Tax (GST) on online gaming websites. It explains the motives behind the decision, its potential impact on the online gaming industry, the expected tax revenue, and whether any states opposed this decision in the GST Council.

Analysis:

(a) Decision to Levy 28% GST: The decision to impose a 28% GST on online gaming websites stems from the recommendations of the GST Council, a constitutional body comprising representatives from the Union Government and State/UT Governments. Actionable claims related to betting and gambling supplied in online gaming have been subject to 28% GST since the introduction of GST in July 2017.

(b) Potential Impact on Online Gaming Industry: The imposition of a 28% GST rate on online gaming has raised concerns about its potential adverse impact on the industry. Online gaming companies supplying actionable claims were initially paying GST at 18% on platform fees, ranging from 5% to 20% of the full face value. The industry has contested the 28% levy on actionable claims related to betting and gambling in online gaming. This decision has led to legal disputes and discussions about its impact on the industry's growth.

(c) Estimated Tax Collection: While the exact estimated tax collection due to the 28% GST on online gaming is not mentioned in the response, it is anticipated that the higher tax rate will contribute to an increase in revenue from the current levels. The change in GST rate could potentially result in higher tax collections from the online gaming industry.

(d) Opposition in GST Council: During the 50th GST Council meeting held on 11th July 2023, the issue of imposing a 28% GST on online gaming was discussed after a report submitted by the Group of Ministers. The GST Council clarified that actionable claims supplied in casinos, horse racing, and online gaming are subject to a GST rate of 28%. This decision was recommended to remove any ambiguity and amend the law. In the 51st GST Council meeting on 2nd August 2023, a few states raised concerns and requested a reconsideration of the matter. However, after thorough discussions, the GST Council decided to maintain its decision made in the 50th meeting.

Conclusion: The decision to levy a 28% GST on online gaming websites has sparked discussions about its potential impact on the industry and tax collections. While the GST Council's decision to impose this tax rate has been upheld after reconsideration, ongoing discussions and legal proceedings may shed more light on the implications for the online gaming sector in India.