The Goods and Services Tax (GST) council has announced changes in the taxation for the online gaming industry.
Online gaming which involves money will now see 28% GST added on full face value. Along with online gaming, this tax law will also be levied on casinos and horse racing.
The E-Gaming Federation's secretary Malay Kumar Shukla issued a statement about the same and labelled this decision as 'unfortunate' for the industry. He also stated that this could lead to taxes exceeding revenues.
He said, “This is an extremely unfortunate decision as charging a 28% tax on full face value will lead to a nearly 1000% increase in taxation and prove catastrophic for the industry. A tax burden where taxes exceed revenues will not only make the online gaming industry unviable but also boost black-market operators at the expense of legitimate tax-paying players, further undermining the industry's image and capacity to survive. It is in addition to the loss of employment opportunities and the huge impact on marquee investors who are heavily invested in this sunrise sector. Furthermore, online gaming is different from gambling, and the Supreme Court and various High Court decisions have reaffirmed the status of online skill-based games as legitimate business activity protected as a fundamental right under the Indian constitution. While the industry was quite optimistic with the new developments including amendments to the IT rules and implementation of TDS on net winnings, all this will be moot if the industry is not supported by a progressive GST regime. We will wait for further details to assess the situation and evaluate our approach.”