The Indian GST Council’s decision to apply a 28% GST on online gaming, casinos, and horse racing has drawn criticism, with some businesses claiming it will kill Indian gaming firms. They claim that the GST hike might make legal online gaming unprofitable, accelerate the flow of foreign currency out of the country, and push users to switch to offshore sites.
The corporations claimed that the GST council’s recent decision on the GST hike on online gaming will “kill India’s online gaming industry” and “render thousands unemployed.”
“Imposing GST on CEA will render the majority of Indian gaming firms unviable, effectively driving consumers towards offshore and illegal platforms that pay no taxes, resulting in a loss in taxes and an increase in foreign exchange. Further, this will also lead increased of employment for thousands working in this sector,” according to Bhavin Pandya, co-founder and co-CEO of Games24x7, one of the leading fantasy sports websites in the nation.
At its 50th meeting in Delhi, the GST Council, which is chaired by Union Finance Minister Nirmala Sitharaman, approved the GST hike, i.e., imposition of a 28% GST on Indian gaming firms, horse racing, and casinos at their full value.
In their most recent meeting, the Group of Ministers (GoM) mostly concurred on the proposed taxes for the aforementioned activities, but there was no agreement on Indian gaming firms because Goa wanted to put an 18% tax on platform fees.
According to Invest India, Indian gaming firms have raised $2.8 billion from local and foreign investors over the past five years.
“This development indicates an increase from 1.8 rupees per 100 rupees spent on a game to 28 rupees per 100. This will not only discourage players from playing; 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 digitally evolving gaming ecosystem seems blurry at this point,” according to Ms. Shivani Jha, Tech Policy Lawyer and Director of EPWA (E-Gamers and Players Welfare Association). It may also push them to play on offshore platforms
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Another participant in the market claimed that the council’s decision is a “self-goal” intended to destroy the sector.
“GST on GGV is a self-goal that will kill India’s Skilled Online Games industry. Today’s decision at the GST Council is not in national interest as it will destroy a significant portion of the successful companies in India’s Start-up Ecosystem,” according to Amrit Kiran Singh, Chief Strategy Advisor to the Founders of Gameskraft.
“There is a fine line between skill-based games and casinos/betting apps, and they must not be treated the same way; a levy of an 18% tax rate would have been helpful for the gaming industry. Introducing a 28% tax rate not only hampers online gaming platforms’ capacity to develop new games and technologies but also undermines their competitiveness in the market,” according to Aaditya Shah, COO of IndiaPlays.
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