“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,” said Bhavin Pandya, Co-founder, Co-CEO, Games24x7, one of the country’s top fantasy sports platforms.
GST Council headed by Union Finance Minister Nirmala Sitharaman gave a nod to levy 28 per cent GST on online gaming, horse racing and casinos at full value at the 50th meeting of the GST Council held in Delhi.
Group of Ministers (GoM) in their previous meeting broadly agreed on the proposed taxes on the said activities, however, there was no consensus on online gaming as Goa proposed to impose only 18 per cent tax on platform fees.
Indian gaming industry raised $ 2.8 billion from domestic and global investors combined in the last 5 years said Invest India.
“This development indicates an increase from 1.8 rupees per 100 rupees spent on a game to 28 rupees on per 100. This will not only discourage players from playing, the professionals for whom its a livelihood will 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,” said Ms. Shivani Jha, Tech Policy Lawyer and Director, EPWA (E-Gamers and Players Welfare Association). Another player in this market said that the decision is a ‘self-goal’ of the council to kill the industry. “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,” said Amrit Kiran Singh, Chief Strategy Advisor to the Founders, Gameskraft.
Singh added that the decision will support foreign companies which at the same time will lead to the death of the domestic gaming market.
“USA and China are the market leaders with 23 per cent and 25 per cent, respectively. This is a borderless industry and over-taxation in India will only support the cause of the overseas gaming companies and encourage Indian industry to migrate overseas,” said Singh.
“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,” said Aaditya Shah, COO, IndiaPlays
The council has argued that there should be no distinction between ‘game of skill and game of chance.’
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