HomeLegal AdviceKarnataka Cabinet Defers Draft Ordinance on 28% GST on Real-money Gaming

Karnataka Cabinet Defers Draft Ordinance on 28% GST on Real-money Gaming

The Karnataka cabinet has temporarily deferred the approval of a draft ordinance proposing a 28 percent GST (Goods and Services Tax) on online real-money gaming, casinos, and racecourses. The decision, which was expected to receive approval during a recent cabinet meeting, has been postponed to the next session.

The draft ordinance, prepared by the finance department, is currently under scrutiny by the law department. While some sources claim the cabinet has given tentative approval, there seems to be division within the government. Karnataka’s IT-BT Minister, Priyank Kharge, has openly expressed opposition to the proposed GST rate, arguing that it could hinder India’s ambitious $1-trillion digital economy target.

The GST Council had originally suggested a 28 percent GST on the entire face value of gaming transactions, regardless of whether they involved skill or chance. However, the council recommended that GST be applied to deposits rather than individual bets to prevent double taxation. Currently, gaming platforms are subject to an 18 percent GST on platform fees.

The GST Council has urged all states to implement the new tax rates by October 1, 2023, with a review scheduled six months after the implementation. The amendments to GST laws have already been passed at the central level, and some states like Haryana and Arunachal Pradesh have followed suit with similar amendments to their state GST laws. The fate of the proposed 28 percent GST on real-money gaming in Karnataka remains uncertain, pending further cabinet discussions.

Team Vakilsearch