BANGALORE: In a significant development, the state of Karnataka has taken a definitive step towards imposing a 28% Goods and Services Tax (GST) on various entertainment and gaming activities, including casinos, online gaming platforms, and racecourses. The state's Governor, Thaawarchand Gehlot, granted his assent for the promulgation of an ordinance aimed at amending the Services Tax Act to introduce this new tax regime. This crucial move comes just ahead of the Central Government's planned nationwide implementation of the revised tax structure, scheduled for October 1.

The decision to promulgate this ordinance was necessitated by the fact that the Assembly session is currently not in session and is unlikely to be convened until the winter session. Karnataka, like several other states, has recognized the pressing need to enact this tax legislation promptly.

With the introduction of the new tax regime on online gaming, the state anticipates a significant boost to its revenue, estimating an additional influx of Rs 1,500 crore. This expected revenue windfall underscores the state's commitment to financial stability and resource augmentation.

Importantly, it should be noted that this ordinance does not supersede any existing laws that might govern or restrict online gaming, horse racing, or lotteries. It firmly clarifies that the imposition of an augmented tax rate does not imply the legitimization of these activities.

On a broader scale, the Central Government is poised to implement the new 28% tax slab from October 1. It had earlier emphasized that state Assemblies were required to pass a bill or introduce an ordinance before September 30 to align with this timeline. As of now, three states, including Haryana, Maharashtra, and Karnataka, have successfully met this deadline.

The journey to this significant policy shift began in July of the current year when the GST Council ratified the imposition of the highest tax slab of 28% on the online gaming industry. The bill subsequently received approval from both the Lok Sabha and the Rajya Sabha in August, paving the way for these transformative changes in the tax landscape.

Karnataka's proactive stance in promulgating this ordinance underscores its commitment to align with the new tax structure proposed by the Central Government. This move not only seeks to generate substantial revenue for the state but also reflects the evolving landscape of taxation in the realm of online gaming and entertainment.

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