Online gaming companies expressed their concerns regarding the 28 percent GST imposed by the GST Council on online gaming, casinos, and horse racing. This tax will not only limit their ability to invest in new games but also impact their cash flows and hinder business expansion. The All India Gaming Federation (AIGF) strongly criticized this decision, deeming it unconstitutional, irrational, and egregious.
AIGF CEO Roland Landers argued that the decision ignores years of settled legal jurisprudence, grouping online skill gaming with gambling activities. He believes that this decision will devastate the Indian gaming industry, leading to a massive loss of jobs, with the only beneficiaries being illegal offshore platforms. Landers expressed disappointment in the fact that despite the central government’s support for the industry, such a legally unsustainable decision was made, disregarding the opinions of most GoM states that extensively studied the matter.
Online gaming players have repeatedly requested the government and the GST Council to impose an 18 percent GST rate on their segment, as opposed to the recommended 28 percent by the Group of Ministers (GoM). Aaditya Shah, COO of IndiaPlays, warned that the implementation of a 28 percent tax rate would present significant challenges to the gaming industry. This higher tax burden would limit companies’ cash flows and hinder their ability to invest in innovation, research, and business expansion. Shah also emphasized that skill-based games and betting or casino apps should not be treated in the same manner.
The E-Gaming Federation (EGF), which includes members such as Games 24×7 and Junglee Games, expressed concern that excessive taxes would render the online gaming industry unviable and benefit black market operators rather than legitimate tax-paying players. EGF Secretary Kumar Shukla highlighted the negative impact on employment opportunities and marquee investors heavily invested in this promising sector. EGF emphasized the distinction between online gaming and gambling, stating that the status of online skill-based games as legitimate business activities protected under the Indian constitution has been reiterated by the Supreme Court and various High Court decisions.
Shukla emphasized the importance of a progressive GST regime in supporting the industry and ensuring its growth. A tweet from Grover criticized the government’s decision, suggesting that it would lead to the demise of the real money gaming industry in India. Grover called for startup founders to enter politics and represent the industry. Mitesh Gangar, Co-Founder & Director of PlayerzPot, warned that the increased burden would also negatively impact India’s massive gaming industry and discourage new players from entering. Gangar highlighted potential economic stress, job restriction, and curtailed growth within the sector.
The Federation of Indian Fantasy Sports (FIFS) expressed concern that the decision would shift users to illegal betting platforms, posing a risk to users and causing revenue loss for the government. Shilpy Chaturvedi, Partner at Deloitte India, criticized the proposal to increase the tax rate to 28 percent, particularly on the entry amount for real money games. Chaturvedi noted that the distinction between games of skill and chance has been eliminated, which could pose challenges for both GST and regulatory laws.
Rajat Bose, Partner at Shardul Amarchand Mangaldas and Co, expressed disappointment in the removal of the distinction between games of skill and chance, stating that it is a setback for the Indian gaming industry. He had hoped that the levy would be based on the margin rather than the full face value. Kishore Kumar, Lead of Indirect Tax at Taxmann, suggested that the blanket proposal to levy GST on the full face value of online gaming could put an end to the ongoing debate regarding games of skill versus games of chance. Kumar believes that this change would equate skill-based games with gambling and betting.
In summary, the decision to impose 28 percent GST on online gaming has raised concerns among gaming companies and industry representatives. They argue that this tax rate will have adverse effects on their ability to invest, cash flows, and business expansion. Furthermore, they believe that online skill gaming should be distinguished from gambling activities. They emphasize the importance of a progressive GST regime that supports the industry’s growth and ensures a fair and sustainable tax burden.
Denial of responsibility! TechCodex is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
Eugen Boglaru is an AI aficionado covering the fascinating and rapidly advancing field of Artificial Intelligence. From machine learning breakthroughs to ethical considerations, Eugen provides readers with a deep dive into the world of AI, demystifying complex concepts and exploring the transformative impact of intelligent technologies.
