Kerala set to introduce 28% GST for online gaming

THIRUVANANTHAPURAM: In a recent cabinet meeting at Ramanilayam at Thrissur, the Kerala government has decided to introduce a Goods and Services Tax (GST) of 28 percent on activities like horse racing, gambling and online gaming. This decision is expected to have a retrospective effect from October 1, 2023 pending the signing of an ordinance by the Governor to amend the State Goods and Services Tax Act.

Once the Governor signs the ordinance, these regulations will become enforceable law in the state. The move follows amendments made by the central government based on the directives of the GST Council, expanding the tax levy to cover these activities in Kerala as well.

It's important to note that while online gaming, horse racing and gambling will fall under the tax ambit, their legalization in the state remains uncertain. Currently, these activities are not legally permitted in Kerala leaving it to the government's policy decision whether to initiate them.

The tax will be calculated based on the face value of the bet placed. For instance, if a horse race accumulates bets worth 1000 crores, 28 percent of this amount will be required to be paid as GST. Notably, the GST Council had previously dismissed the proposal to tax 28 percent of betting profits.

While horse racing and gambling are prevalent in states like Goa, Maharashtra and Meghalaya, Kerala currently imposes a 28 percent tax on paper lotteries. During the 50th GST Council meeting, a decision was made to set a 28 percent GST on casino activities, horse racing and online gaming. Subsequently, the Central government amended the GST Act prompting Kerala and other states to consider similar amendments.

The implementation of the amendment ordinance in Kerala had been delayed earlier due to concerns about potential controversies. However, it is expected that other states will also take steps to amend their laws accordingly.