The Goods and Services Tax Council has announced to levy 28% GST on the total earnings generated from casinos, horse racing, and online gaming, said Nirmala Sitharaman as the 50th council meeting concludes in New Delhi on Tuesday.
During the meeting, the council was in a debate about whether to impose 28% GST on betting amounts, gross revenue earned through gaming, or just the platform fees.
How this Decision to Charge 28% GST Will Impact Online Gaming?
This answer is well explained by Shivani Jha, Tech Policy Lawyer and Director, EPWA. After 28% GST is imposed, ₹28 will be levied per ₹100 spent on online gaming, she said.
“This will not only discourage players from playing but the professionals for whom it’s a livelihood will also be burdened by taxation. It may also force them to play on offshore platforms, and the whole vision of creating a digital progressing gaming ecosystem seems blurry at this point,” Livemint quoted Shivani Jha.
Is Government Planning to Crush Online Gaming?
“The implementation of a 28% tax rate will bring significant challenges to the gaming industry,” Aditya Shah, Chief Operating Officer of IndiaPlays quoted by Hindustan Times.
“This higher tax burden will impact companies’ cash flows, limiting their ability to invest in innovation, research, and business expansion,” further added.
“In the post-GST council meeting, Sitharaman was asked if governments want to demotivate e-gaming given its adverse impact on children. The finance minister said that the council does not want to end any industry but they also don’t want to give the wrong message in the country by lowering the tax rate on such industries to the level of essential goods.”
“The decision to levy 28% on gross value in the case of online gaming and casinos is perhaps not what the industry was hoping for. While it has been indicated that this proposal is ‘clarificatory’ in nature, it would have been better to make it prospective to put the past dispute to rest,’ said Pratik Jain, Partner at Price Waterhouse & Co LLP, said to Hindustan Times.