The recent decision made by the GST council to impose a 28% tax on the full face value of bets in online gaming has sent shockwaves through the industry. This move is seen as a significant setback that could have devastating consequences and put the very survival of the gaming industry at risk. It is also expected to result in job losses and a decline in foreign investment.
While the central government believes that this decision will increase revenue from the sector, voices of dissent have emerged from the states of Goa and Karnataka, who argue that it could spell disaster for the online gaming industry.
In response to this development, the Goa government plans to appeal to Finance Minister Nirmala Sitharaman, urging a reconsideration of the decision. Mauvin Godinho, the Industry Minister of Goa, who represents the state on the GST council, revealed that they had proposed a 28% tax on the gross gaming revenue instead of the full face value of bets. However, a consensus could not be reached. Godinho added that Chief Minister Pramod Sawant will take up the issue, and it will need to be reconsidered by the council.
The decision has also drawn criticism from Priyank Kharge, the Minister for IT/BT and rural development and Panchayat Raj in Karnataka. He argues that the 28% tax rate on the online gaming sector will hinder foreign direct investment (FDI) and the startup ecosystem, potentially affecting India’s goal of achieving a $1 trillion digital economy by 2025.
Priyank expressed his discontent on Twitter, stating that although he personally opposes gambling, implementing a flat 28% Goods and Services Tax (GST) on the gaming industry has significant negative implications. The tax applies uniformly, regardless of whether a game relies on skill or chance. He believes that a more thorough consideration of this decision is necessary, as it could hinder the achievement of the $1 trillion digital economy target by 2025. Additionally, the Indian gaming startup ecosystem, which has attracted $2.5 billion in investments, may suffer from reduced prospects of foreign direct investment due to this taxation.
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