Karnataka cabinet to consider draft ordinance on 28% GST on real-money gaming on September 7
Sources said the state cabinet meeting on September 7 is likely to discuss the draft ordinance. A senior government official said the government needs to introduce an ordinance since the GST Council, headed by Finance Minister Nirmala Sitharaman, has asked all states to implement the decision by October 1, 2023.
“The finance department has prepared the draft ordinance and it will be presented before the state cabinet,” the official said.
Karnataka’s revenue minister, Krishna Byre Gowda, who represented the state in the GST council said the council deliberated on the matter for about two years and the decision was made after “prolonged and exhaustive discussion and deliberation”.
“If the decision is made after such a thorough process, public interest demands that we move to implement the decision at the earliest. In fact, further delay would be contrary to public interest,” he said. The Economic Times was the first to report this development.
LK Atheeq, additional chief secretary, finance department, said that they have not yet estimated the additional revenue, but it is expected to be in the range of around Rs 800 crore to Rs 1,000 crore per year for Karnataka. The Congress-led state government requires Rs 50,000 crore-Rs 60,000 crore a year to implement five poll guarantees.
When contacted by Moneycontrol, state IT-BT minister Priyank Kharge said he is unaware of the move to present the draft ordinance imposing a 28 percent GST on online gaming before the state cabinet.
Moneycontrol had previously reported that the Karnataka government was divided over the GST Council’s recent decision to levy 28 percent on the real-money gaming sector. Kharge had earlier said that tax poses a blow to India’s $1-trillion digital economy target.
On July 11, the GST Council had decided to impose the top GST slab of 28 percent on the full value of money paid by users to play skill-based games uniformly, with no distinction made between games of skill and chance. Gaming platforms currently pay an 18 percent GST on platform fees. The council however has agreed to review the levy six months after implementation.
On August 11, the last day of the Monsoon Session, Finance Minister Nirmala Sitharaman introduced bills to amend the Central and Integrated GST laws and it was passed in both Lok Sabha and Rajya Sabha. President Droupadi Murmu also subsequently gave her assent to the amendments on August 19.
The real-money gaming industry, which currently accounts for about 77 percent of India’s overall gaming revenues, has been hit hard by this decision, since it will result in a significant tax burden on the companies.
Industry executives and other stakeholders say the proposed rules would increase a company’s tax burden by 350 to 400 percent, severely impacting the growth trajectory of the sector.
Several startups including Mobile Premier League, Spartan Poker, and Kavin Bharti Mittal’s Hike have also laid off employees in recent weeks.
