Industry views on 28% GST on online gaming
"While the industry has stated that grouping online games with betting/gambling would be a huge impact to all market players," Ankur Gupta, Practice Leader- Indirect Tax, SW India, has stated. "In most nations, the online gaming sector is taxable more or less at par with the present taxability of 18 percent," he continued, "thus moving to 28 percent is a disadvantage for Indian game companies."
"What remains to be seen is how these services are valued. It should only apply to margin/platform fees since if it applied to the full pool value, it would have a negative impact on users, as they would have less playable value "he noted. According to Games24x7 Co-CEO Trivikraman Thampy, the increase in taxation would not only be disastrous for the industry, but it would also encourage offshore operators to avoid Indian tax jurisdiction by hosting games in another country. "It would be a triple whammy — the industry would lose out, the government would lose out on tax revenue, and players would lose out because they would be exposed to unscrupulous operators," he had said.
An association of online skill-based gaming platforms has petitioned the government to keep GST at the current rate for the business, which employs approximately 45,000 people and has 400 players. E-sports, fantasy games, rummy, poker, and chess are examples of online skill games. Participation in such games is either free or involves actual money in the form of platform fees. The expansion of the online gaming industry is inextricably tied to the growth of various other industries, including semiconductors, banking, payment gateways, telecommunications, fintech, sports, and entertainment.
GST is now imposed on platform fees, known as Gross Gaming Revenue (GGR), rather than the total cash pooled in for a game, according to Games24x7 Co-CEO. "The appropriate taxing range for the online gaming business is between 15 and 20%, according to international best practises. Our present GST rate of 18% is in accordance with best practises and helps to limit the number of unauthorised businesses "he stated. He went on to say that online games of skill are fundamentally distinct from games of chance, and that the skill-based gaming sector is not gambling or lottery.
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