Online Gaming Industry Awaits Final Decision of GST

Online Gaming

A two-day GST Council meeting was held in Bengaluru from 23 to 24 July. In this meeting, the Group of Ministers (GoM) of the GST Council discussed the tax rates of 18 to 28 percent on the online gaming industry.

Online Sports Are Being Combined With Casinos, Horse Racing, Lotteries, Betting and other Chance-Based Sports

This, along with an increase in the tax rates being levied on the Overall Contest Entry Amount (CEA), has caused turmoil in the online gaming industry.

As of now, 18 per cent GST is levied on the platform’s commissions taken from the pool of funds invested by players in small amounts on skill-based games, which is known as gross gaming revenue.

However, with new tax policies being discussed, 28 per cent GST may be levied on the full competition entry amount. The increase in tax slabs may negatively impact the profit margins of gaming platforms and the overall gaming ecosystem.

Moreover, the new taxation policies may bridge the gap between skill-based sports with chance-based sports, which Indian courts have upheld for more than 60 years. Both are different in terms of law as well as practice and hence cannot be treated equally with each other.

The GoM, led by Meghalaya Chief Minister Conrad Sangma, has made efforts to understand the workings of the online gaming industry and has held meetings with industry leaders to address the concerns raised by them for rethinking tax rates.

According to sources, these issues were raised by the All India Gaming Federation (AIGF) during its meeting with the GoM, whose representatives said such taxation would be disastrous for the gaming industry and would be abolished. There is little potential for the industry to contribute to the Indian economy.

No decision has yet been taken regarding reconsideration of tax rates. However, the GoM will meet again in the first week of August and they have been given time till August 10 to submit their final report and the industry is also awaiting the final decision.

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