Online Gaming Bill: Regulation and Tax Implications

The Online Gaming Bill has been approved by the Union Cabinet to regulate betting applications, as reported by ET Now. This bill is set to be introduced in the Lok Sabha on Wednesday. The initiative comes in response to a rise in fraud cases in recent months and increased scrutiny from investigating agencies regarding celebrities endorsing betting applications.

Key Provisions of the Online Gaming Bill

Reports indicate that the bill will incorporate penalties and punishments for actions such as promoting online betting apps. Additionally, the Centre is anticipated to enforce a 40% Goods and Services Tax (GST) on online gaming in conjunction with a new framework around the Diwali season. It has also been reported that the bill may prohibit celebrities, sportspersons, and social media influencers from endorsing betting platforms, aiming to diminish the reliance on star power in promoting these applications.

Enhanced Enforcement for Online Gaming

The bill intends to empower enforcement agencies to take action against offshore and unregistered operators. As of now, the Directorate General of GST Intelligence (DGGI) has blocked 357 websites and frozen approximately Rs 126 crore across 2,400 bank accounts. Almost 700 offshore entities are currently under investigation for alleged GST evasion.

Clarification for Domestic Operators

According to reports from ABP, the primary focus of the bill is to provide clarity for domestic operators, especially those offering skill-based games. Parliament is expected to discuss the distinction between skill and chance while considering its alignment with state-level gambling laws.

Tax Implications

The Finance Act of 2023 has introduced a 30% tax on net winnings from online games, which will be applicable starting from the assessment year 2024–25. Additionally, a 28% GST on online gaming has come into effect from October 1, 2023.