Parliament has approved amendments to the Central and integrated GST law aimed at imposing a 28 percent tax on the full amount in casino, online gaming and horse race clubs in India. The amendment will help to stop or reduce the activities like money laundering, black money, associated with the online gaming industry. 

Finance Minister, Mrs. Nirmala Sitharaman presented The Integrated GST Bill (Amendment), 2023 and the The Central GST Bill ( Amendment) , 2023. According to both the bills, registration is mandatory for all the offshore e-gaming companies operating in India. In case the companies fail to obey the GST registration and tax payment norms, their access will be blocked. The GST council has also approved the amendment.

The company needs money to run its operations smoothly, to do so it will deduct a specific amount from the balance on the basis of processing fees. The dedicated amount is known as GGR – Gross Gaming Revenue.

For example – If someone is playing an online game whose total entry fee is ₹100. 

Gross Gaming Revenue (GGR)will be – ₹20

Amount left after GGR is know as prize pool- ₹80 (₹100-₹20)

Before the new Bill came in existence the total percentage of tax on GGR was 18% 

So, the company has to pay 18% of ₹20 (GGR amount) which is ₹ 3.6 to the government

After the new Bill came into existence from now on the percentile of tax is 28% which will be implemented on the total amount.

So, now the company has to pay 28% of ₹100 (Total Amount) which is ₹28 to the government. 

The CGST amendment Bill defined online gaming as an electronic network. 

In online money gaming, players deposit the cash and expect to earn profit on the deposits. The gaming industry has divided gaming into two categories – Game of Skill and Game of Chance. These categories were only made by the gaming industry but never approved by the government. 

So, now with the amendment to GST law, the online gaming, casino, horse racing will come under the same slab and will be treated the same as actionable claims similar to betting and gambling. But all the games which don’t involve any kind of money activity will not be taxable. 

1.Online gaming companies will be having less revenue as processing fees which means less profit in the upcoming years. 

2.There will be a shortage in the amount of prize pool because of that users will be discouraged from playing games which will stop the growth of gaming industry in India. 

3.Pressure on the users who win money because the government imposes 30% tax on the amount. 

Many big players in online gaming industry like Mobile Premier League (MPL) , Rush gaming Universe has laid off it’s employees to cut down the cost burden due to the increase in GST percentage that is 28%