28% GST on online games: Industry expresses distress, says will wipe them out – Times of India
The online gaming industry has expressed its strong discontent over Goods and Services Tax Council’s decision to levi 28% GST on online games. At the 50th GST Council meet in New Delhi today (July 11), it was agreed to levy a 28 per cent tax on online gaming, casinos and horse racing. The GST tax would be levied on full face value. The GST council also agreed that there should be no distinction between game of skill and game of chance. The effective date for 28 percent GST levy on online gaming will rollout after amendments to GST law.
The announcement has been met with huge dismay by the online gaming industry that termed it “catastrophic”. Roland Landers, chief executive of All India Gaming Federation (AIGF)said that the GST Council’s decision is “unconstitutional, irrational, and egregious.” “This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms,” Landers said in a statement. AIGF is a trade body that represents many players including Mobile Premier League, Gameskraft, Paytm First Games, Zupee, Nazara and Rush.
Bhavin Pandya, Co-founder and Co-CEO, Games24x7, said that the announcement will make the industry “unviable”. “We are deeply distressed with the GST Council’s decision to implement 28% GST on the Contest Entry Amount (CEA) as opposed to Gross Gaming Revenue, which is the international standard for the sector. The tax on CEA effectively creates a hostile environment for legitimate domestic platforms with an unrealistic tax burden and is counter intuitive to the measures that the government has taken to promote this sunrise sector. Imposing GST on CEA will render the legitimate online gaming industry unviable, effectively driving consumers towards offshore and illegal platforms that pay no taxes, resulting in loss of taxes and outflow of foreign exchange. Further, this will also lead to loss of employment for thousands working in this sector. This contradicts the government’s efforts to promote a healthy domestic online gaming sector, as demonstrated in the MeitY’s online gaming rules and the Finance Bill 2023 amendments to the Income Tax Act. We urge the government to reconsider this decision and work with the industry stakeholders to find a more suitable taxation model that supports sustainable growth for the industry,” he said.
Siddharth Sharma, SVP, Business Strategy, Head, of Digital Works (A23), echoed the same sentiment.“The new tax rate of 28% on Gross Gaming Value is an unexpected move by the GST Council, which will have far-reaching consequences for the industry and question its basic viability. Not only will this burden hinder the growth of this nascent industry, its application will compress new innovation and opportunities. This decision does not take into account the pleas of the industry, global precedents, and even counters the favourable regulatory environment being built up for online gaming in recent months. Businesses have a legitimate concern that this move will push users towards illegitimate betting and gambling operators that don’t follow the laws of the land,” he said.
The announcement has been met with huge dismay by the online gaming industry that termed it “catastrophic”. Roland Landers, chief executive of All India Gaming Federation (AIGF)said that the GST Council’s decision is “unconstitutional, irrational, and egregious.” “This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms,” Landers said in a statement. AIGF is a trade body that represents many players including Mobile Premier League, Gameskraft, Paytm First Games, Zupee, Nazara and Rush.
Bhavin Pandya, Co-founder and Co-CEO, Games24x7, said that the announcement will make the industry “unviable”. “We are deeply distressed with the GST Council’s decision to implement 28% GST on the Contest Entry Amount (CEA) as opposed to Gross Gaming Revenue, which is the international standard for the sector. The tax on CEA effectively creates a hostile environment for legitimate domestic platforms with an unrealistic tax burden and is counter intuitive to the measures that the government has taken to promote this sunrise sector. Imposing GST on CEA will render the legitimate online gaming industry unviable, effectively driving consumers towards offshore and illegal platforms that pay no taxes, resulting in loss of taxes and outflow of foreign exchange. Further, this will also lead to loss of employment for thousands working in this sector. This contradicts the government’s efforts to promote a healthy domestic online gaming sector, as demonstrated in the MeitY’s online gaming rules and the Finance Bill 2023 amendments to the Income Tax Act. We urge the government to reconsider this decision and work with the industry stakeholders to find a more suitable taxation model that supports sustainable growth for the industry,” he said.
Siddharth Sharma, SVP, Business Strategy, Head, of Digital Works (A23), echoed the same sentiment.“The new tax rate of 28% on Gross Gaming Value is an unexpected move by the GST Council, which will have far-reaching consequences for the industry and question its basic viability. Not only will this burden hinder the growth of this nascent industry, its application will compress new innovation and opportunities. This decision does not take into account the pleas of the industry, global precedents, and even counters the favourable regulatory environment being built up for online gaming in recent months. Businesses have a legitimate concern that this move will push users towards illegitimate betting and gambling operators that don’t follow the laws of the land,” he said.
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