The online skill-based gaming industry urged the government to keep their services under the 18% Goods and Services Tax (GST) slab instead of moving to the 28% slab. The GST rate increase badly hits the industry and encourages offshore operators to overcome the Indian tax jurisdiction by hosting games in other countries.
The association of online skill-based gaming platforms has made a representation before the government to retain the GST rate at the current level for the industry, with 400 companies employing about 45,000 people.
Also, the GST rate increase would be a loss for everyone; as the industry loses out, the government loses out on tax revenue, and players lose out as they would be exposed to unethical operators.
Online games of skill include fantasy games, e-sports, poker, rummy or chess, etc. These games are either free or involve platform fees to participate. GST is currently charged on the platform fee, known as Gross Gaming Revenue (GGR), rather than the entire amount pooled in for a game.
International best practices for the online gaming industry show the optimal taxing bracket as between 15 and 20%. Our current GST rate at 18% is in line with best practices and reduces the incidence of illegitimate operators.
The industry is worried that, as per the sources, the GST Council, in its next meeting, might increase GST on racecourses, casinos and online games based on the suggestions of the panel of state ministers. However, the next Council meeting agenda is yet to be finalised.
At present, horse racing, casino, and online gaming services attract 18% GST. However, the officer shall decide whether the tax should be levied on gross or net valuation after further deliberations.
The government had set up a panel of state ministers in May 2021 for better valuation of services of racecourses, casinos and online gaming portals. The online gaming industry is directly linked to the growth of several sectors such as sports, entertainment, payment gateway, fintech, banking, semiconductor, and telecom.
It is to be noted that the online games of skills are entirely different from games of chance, and the skill-based gaming industry does not constitute gambling or lottery.
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DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.