28% GST on Online Gaming Brings Disappointment and Concerns for Industry Stakeholders
The recent decision by the GST Council to impose a 28% tax on the turnover of online gaming in India has stirred discontent among industry stakeholders. Joy Bhattacharjya, Director General of the Federation of Indian Fantasy Sports (FIFS), expressed disappointment, stating that taxing the total entry amount, including prize money, could have irreversible consequences for the industry. The move is feared to lead to revenue loss, job cuts for skilled professionals, and hinder further foreign direct investment (FDI) in the sector. Industry experts also warn that this decision may drive users towards illegal betting platforms, posing risks for users and decreasing government revenue.
India’s online gaming industry has been experiencing substantial growth, with nearly 1,000 companies operating in the sector and employing over 100,000 individuals. The industry’s economic potential is expected to further expand in the coming years.
The implementation of GST has posed regulatory challenges for the online gaming industry, and the latest decision by the GST Council has added to the complexities. The decision to levy 28% GST on online gaming has surprised and concerned industry stakeholders. The taxation and legality of online games in India depend on whether they are categorized as games of chance or games of skill. Games of chance generally attract higher GST, while games of skill have lower GST rates. However, the council has now argued against making a distinction between the two types of gaming. Prior to the decision, the main dilemma was whether GST should be applied to the total cash pool or only the service element earned by the online gaming platforms.
The Finance Minister has now clarified that the tax will be levied on the entire value, specifically on the full face value of the bet placed or the money paid to play the game, rather than the gross gaming revenue as desired by the industry. This change in taxation is expected to have a significant impact on the industry.
Overall, the implementation of 28% GST on online gaming in India has created disappointment and concerns within the industry, with stakeholders worrying about its potential effects on revenue, employment, foreign investment, and the emergence of illegal betting platforms.