Karnataka Government Notifies Ordinance To Implement 28% GST On Real Money Gaming
The Karnataka government has notified an ordinance to implement a 28% Goods and Services Tax (GST) on real money gaming, casinos, and racecourses. The ordinance was signed and gazetted by Governor Thawar Chand Gehlot on September 29, 2023, and came into effect on October 1, 2023.
The move comes ahead of the Union government’s planned implementation of the new GST regime on the online gaming sector. On July 28, 2023, the GST Council decided to impose a 28% GST on the full face value of stakes in online gaming, casinos, and horse race clubs, irrespective of whether the game is a game of skill or chance. The decision was taken to bring uniformity in the taxation of the gambling sector and to prevent tax evasion.
While the Union government has not yet issued a notification to implement the new GST regime, states are required to pass their own laws or ordinances to adopt the new tax rates. The Karnataka government is the first state to do so.
The new GST rate of 28% will apply to all real money gaming platforms, including online casinos, sports betting, and poker websites. The tax will be levied on the full face value of stakes, meaning that players will have to pay GST even if they win.
The new GST regime is expected to have a significant impact on the real money gaming industry in Karnataka. The industry is currently worth over ₹10,000 crore and employs over 100,000 people in the state. However, the high GST rate of 28% is likely to lead to a decrease in player activity and revenue for gaming companies.
The industry has already expressed its concerns about the new GST rate. The All India Gaming Federation (AIGF), a trade body representing the online gaming industry, has said that the high tax rate will “kill” the industry. The AIGF has also argued that the new tax rate is discriminatory, as it does not apply to other forms of gambling, such as lotteries and horse racing.
Despite the concerns raised by the industry, the Karnataka government has defended its decision to implement the new GST rate. The government has said that the new tax rate is necessary to generate revenue and to prevent tax evasion. The government has also said that the new tax rate will not apply to games of skill, such as rummy and poker.
It remains to be seen how the new GST rate will impact the real money gaming industry in Karnataka. However, it is clear that the new tax regime will have a significant impact on the industry, both in terms of revenue and player activity.
Here are some of the potential consequences of the new GST rate on the real money gaming industry in Karnataka:
- Decrease in player activity: The high GST rate is likely to lead to a decrease in player activity, as players will have to pay more to play. This could lead to a decline in revenue for gaming companies.
- Increase in costs for gaming companies: Gaming companies will have to bear the cost of the new GST rate, which will lead to an increase in their costs. This could lead to a decline in profitability for gaming companies.
- Increase in illegal gambling: The high GST rate could lead to an increase in illegal gambling, as players may seek out alternative ways to gamble without paying GST. This could have negative social and economic consequences.
- Job losses: The decline in revenue and profitability for gaming companies could lead to job losses in the industry.
It is important to note that the new GST rate is still in its early stages of implementation. It is too early to say what the long-term impact of the new tax regime will be on the real money gaming industry in Karnataka. However, it is clear that the new GST rate will have a significant impact on the industry, both in terms of revenue and player activity.
