The decision of the Goods and Services Tax Council to impose a 28% GST on online games has been met with discontent from the online gaming industry. This decision was made during the 50th GST Council meeting in New Delhi on July 11. The tax will be levied on the full face value of online gaming, casinos, and horse racing, with no distinction between games of skill and games of chance. The implementation of this tax will occur after amendments to the GST law.
The online gaming industry strongly opposes this decision, considering it “catastrophic.” Roland Landers, the CEO of the All India Gaming Federation (AIGF), has criticized the GST Council’s decision, calling it unconstitutional, irrational, and egregious. Landers believes that this decision will lead to the downfall of the Indian gaming industry and result in significant job losses. He also believes that illegal offshore platforms will be the only beneficiaries of this decision. AIGF represents several players in the industry, including Mobile Premier League, Gameskraft, Paytm First Games, Zupee, Nazara, and Rush.
Bhavin Pandya, Co-founder and Co-CEO of Games24x7, expressed deep distress over the decision, stating that it will make the industry unviable. Pandya disagrees with the implementation of a 28% GST on the Contest Entry Amount (CEA) instead of the Gross Gaming Revenue, which is the international standard for the sector. He believes that taxing the CEA creates a hostile environment for legitimate domestic platforms and burdens them with unrealistic tax obligations. Pandya argues that this decision will drive consumers towards offshore and illegal platforms, leading to a loss of taxes and employment. He urges the government to reconsider and work with industry stakeholders to develop a more suitable taxation model that supports sustainable growth.
Siddharth Sharma, SVP of Business Strategy and Head of Digital Works (A23), shares the same sentiment as Pandya. He believes that the new tax rate of 28% on Gross Gaming Value will have far-reaching consequences for the industry and question its viability. Sharma claims that this burden will hinder the growth of the industry and limit innovation and opportunities. He criticizes the decision for ignoring industry pleas, global precedents, and the favorable regulatory environment being built for online gaming. Sharma warns that users may turn to illegitimate betting and gambling operators that do not comply with the laws of the land.
The online gaming industry’s discontent with the GST Council’s decision highlights the potential negative impact on the industry’s growth, job opportunities, and tax revenues. There is a call for the government to reconsider and collaborate with industry stakeholders to develop a more favorable taxation model.
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