Budget 2024: Huge potential with 28% GST on online gaming, says Revenue Secretary

In a post-Budget interview with CNBC-TV18, Revenue Secretary Sanjay Malhotra shed light on the remarkable surge in revenues following the implementation of a 28% Goods and Services Tax (GST) on online gaming. The Finance Minister, Nirmala Sitharaman, presented the interim Budget on Thursday, February 1.

Malhotra said since the introduction of the 28% GST on online gaming from October 1, 2023, the government has seen a sixfold increase in revenue.

"The (revenues) are averaging about ₹1,200 crore now, as against ₹200 crore per month that we were getting earlier," Malhotra said, adding, "(This is) only from online gaming platforms — this does not include casinos, etc. So there was a huge potential, which was untapped, and which we have been now able to tap."

When addressing concerns about the retrospective or prospective nature of these changes, Malhotra clarified that the adjustments were prospective. However, he pointed out that even retrospectively, the belief was that online games were liable to pay a 28% tax rate due to their categorisation as actionable claims. While the industry argues against this classification, contending that they should only be liable for an 18% tax rate, the Revenue Secretary emphasizes the government's stance.

"That dispute is in the court, but going forward, there is no issue — all of them are paying 28%, and they are paying 28% on the actual value," he added. 

The GST Council in its meetings in July and August 2023 had decided to clarify the levy of 28% GST on full face value of bets placed on online gaming platforms and horse racing and casinos.

Online gaming, casinos and horse racing were classified as actionable claims, like lottery, betting and gambling, under GST with 28% tax. The amendments to Central GST and Integrated GST were approved by Parliament and were notified by the central government effective October 1.