Tamil Nadu has revised GST valuation and compliance rules targeting tobacco products, pan masala, and online gaming to curb revenue leakage. The state is enforcing stricter valuation norms — particularly for goods prone to under-invoicing — and tightening monitoring of online gaming platforms, which now attract 28% GST on full face value of bets. These measures align with recent GST Council decisions and aim to improve tax collection efficiency across high-evasion sectors within the state.

This development sits at the intersection of three GST reform streams that have converged since 2023.

**Tobacco and Pan Masala Valuation:** These goods have historically been under-invoiced because manufacturers declare artificially low transaction values. The GST Council introduced a Special Composition Scheme with capacity-based levy (tracked via electronic track-and-trace systems) to counter this. Tamil Nadu's tightening reflects state-level enforcement of these central norms, including mandatory registration of machines and physical verification of production capacity.

**Online Gaming — 28% GST on Full Face Value:** The GST Council's landmark October 2023 decision classified online gaming (including skill-based games like fantasy sports and rummy) as 'actionable claims' and levied 28% GST on the full face value of bets placed, not on gross gaming revenue. This overturned the earlier 18% on platform fees. States like Tamil Nadu are now ensuring platforms operating within their jurisdiction register, report, and remit correctly.

**Revenue Leakage Mechanism:** Leakage in GST occurs via (a) under-valuation of supply, (b) fraudulent input tax credit (ITC) claims, and (c) non-registration. Tamil Nadu's action targets all three. For online gaming, the primary risk is offshore platforms evading registration.

**Constitutional Dimension:** GST is a concurrent tax — the Centre levies CGST and states levy SGST at identical rates. State enforcement actions like Tamil Nadu's supplement GSTN's central monitoring, making them exam-relevant as examples of cooperative fiscal federalism in action.