Friday, July 12, 2024

‘Indian Gamers United’ to demand reversal of the proposed 28% GST on online gaming

Distressed by the proposed imposition of 28% GST on online gaming, bringing them on par with casinos and horse racing, online gamers from across the state of Rajasthan have joined gamers from other cities under the banner of ‘Indian Gamers United’ to demand its reversal.

Several gamers assembled at Narayan Singh Circle, Jaipur Today, and conducted a peaceful demonstration, appealing to the policy makers for a more tax friendly online gaming regime. These gamers were carrying banners and placards and raised slogans drawing attention of the policy makers to support them.

These gamers are concerned that online games are fast emerging as an option for young people to use their gaming skills to earn money in their free time and become part of the gig economy. Now, an unviable rate of GST at the rate of 28% on online games will kill this growing industry untimely, sending this growing tribe of online gamers into a vacuum.

The 50th GST Council meeting held on 11th July 2023 proposed imposition of a 28% GST on online gaming, along with casinos and horse racing on the full face-value. Under the new regime a levy of 28% GST will be made on the total value of the consideration received in online gaming, including the entry fee. In this sweeping decision, the council has also put an end to the debate on “games of skill or chance, by deciding to treat all games at par. This is a major deviation from the currently prevailing tax regime on online gaming.

Currently, online gaming companies pay the government a GST of 18 per cent levied on the Gross Gaming Revenue (GGR) or the platform fee. The currently prevailing GST regime also differentiates online games based on skills versus chance, something which is also being supported by the Ministry of Electronics and information Technology (MeitY) in their draft regulation for the industry. Besides this, TDS of 30 per cent is deducted on the winnings. Online gamers and poker players did not have any additional impact of GST on the value
of bets placed by them, except for the platform fee collected by the online gaming company, till now.

With the introduction of the new GST amendments, a gamer will have to pay 28 per cent GST on the amount deposited to play the game. Besides this, he will have to pay the platform fee and bear 30 per cent TDS on net winnings. The high tax rate will make it more expensive for players to participate in online gaming. This could lead to players seeking out offshore or illegitimate platforms that do not charge GST, or that charge a lower rate. 

India’s gaming industry is expected to become a $5 billion industry by 2025, growing at a compounded annual growth rate of 28-30 per cent. The real-money gaming segment generated over ₹10,000 crore in revenue in 2022. The proposed GST rate is likely to have a major adverse impact on these figures.

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