In its forthcoming meeting, the Goods and Services Tax Council is expected to define how the tax would be collected on online gaming as well as establish an exact definition of such activities.

“What exactly would constitute online gaming for the purpose of tax is likely to be clarified by the Council. All games, whether those of skill or of chance, will be included in the definition of online money gaming, for the purpose of levying GST,” said a source familiar with the development.

The Council, which will be led by Union Finance Minister Nirmala Sitharaman, will meet via video conference on August 2 to deliberate on the legal amendment as well as the rules to levy the tax. At its last meeting on July 11, the Council unanimously decided to apply a 28% GST on the whole value of online gaming, horse racing, and casinos.

Section 3 of the GST Act must be revised to include online gaming and horse racing as taxable actionable claims. The administration intends to introduce the reforms during the present Monsoon session of Parliament, that is on till August 11. 

Sources said the Council is also likely to elaborate on the manner and basis of levying the tax, which has been a key concern of the online gaming industry. Online gaming players are concerned about recurrent taxes if GST is applied at each level and have requested clarification from the government. According to sources, this problem has been taken into consideration, and the Council will likely examine it.

When a player puts money into a gaming platform, they are basically purchasing the privilege to play games on that platform, according to L. Badri Narayanan, Executive Partner of Lakshmikumaran & Sridharan Attorneys.

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