Implications of Imposing 28% GST on Online Gaming: Concerns Raised by Industry Experts

Finance Minister Nirmala Sitharaman announced on Tuesday that the GST council has approved the imposition of a 28% tax on online gaming, horse racing, and casinos. This decision, made during the 50th GST Council meeting, has sparked worries within the online gaming industry. Several industry experts have expressed their concerns, stating that this move has the potential to cause significant losses to the industry.

According to a Forbes India report, India has over 400 million online gamers, with approximately 90-100 million being regular players. The imposition of a 28% GST on online gaming means that players will have to pay 28 rupees for every 100 rupees spent in an online game, regardless of whether the game is based on skill or chance. This uniform taxation policy does not differentiate between different types of games.

Furthermore, if gamers win more than 10,000 rupees in a game, they will be subject to a 30% tax deduction at source (TDS). This additional financial burden may lead to players limiting their participation in online gaming activities.

Former Shark Tank judge Ashneer Grover took to Twitter to express his thoughts on the matter. He stated, “RIP – Real money gaming industry in India. If the govt is thinking people will put in Rs 100 to play on Rs 72 pot entry (28 per cent Gross GST); and if they win Rs 54 (after platform fees) – they will pay 30 per cent TDS on that – for which they will get a free swimming pool in their living room come the first monsoon – not happening!”

Grover’s statement reflects the concerns shared by many industry experts. Roland Landers, CEO of All India Gaming Federation, argues that the government’s decision overlooks established legal jurisprudence of over 60 years and lumps online skill gaming with gambling activities. He predicts that this decision will not only “wipe out” the entire gaming industry but also lead to significant job losses. Landers believes that the only beneficiaries of this move will be illegal offshore platforms, posing a threat to the Indian gaming ecosystem.

Joy Bhattacharjya, Director General of the Federation of Indian Fantasy Sports (FIFS), describes the decision as a “killer blow” and terms it “unfortunate and terrible” for the industry. The FIFS represents companies such as Winzo, Zupee, GamesKraft, and Nazara.

The concerns raised by industry experts highlight the potential negative consequences of imposing a 28% GST on online gaming. While the government’s intent may be to generate revenue, it is crucial to strike a balance that allows the industry to thrive while ensuring appropriate regulations are in place to safeguard consumer interests. It remains to be seen how the implementation of this tax will impact the online gaming ecosystem in India and whether any amendments or revisions will be made to address the industry’s concerns.

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