Online gaming players urged the government to levy 18% GST on their segment. (representative)
New Delhi:
Online gaming companies said on Tuesday that levying 28 percent GST will limit their ability to invest in new games, impacting both cash flows and business expansion.
The GST Council has approved a 28 percent tax on online gaming, casinos and horse racing. The tax would be levied on the full face value.
The All India Gaming Federation (AIGF), which represents companies like Nazara, GamesKraft, Zupee and Winzo, said the council’s decision is unconstitutional, irrational and egregious.
“The decision ignores more than 60 years of established legal jurisprudence and lumps online skill gaming with gambling activities. This decision will wipe out the entire Indian gaming industry and lead to job losses and the only people who will benefit from it will be anti-national illegal people .” offshore platforms,” said Roland Landers, CEO of AIGF.
He said that when the central government supports the industry, it is a pity that such a legally unsustainable decision has been made, ignoring the views of most of the GoM states that have studied this issue in detail.
Online gaming players have repeatedly urged the government and the GST council to levy 18 percent GST on their segment instead of the 28 percent recommended by the Group of Ministers (GoM).
“Implementing a 28 percent tax rate will pose major challenges to the gaming industry. This increased tax burden will impact companies’ cash flows, limiting their ability to invest in innovation, research and business expansion,” said Aaditya Shah, COO from India Plays. .
He also said skill-based games and apps for betting or casinos should not be treated in the same way.
E-Gaming Federation (EGF), which includes Games 24×7 and Junglee Games, said a tax burden where taxes exceed revenues will not only make the online gaming industry unsustainable but also boost black market operators over at the expense of legitimate taxpaying players.
“It comes on top of the loss of employment and the huge impact on major investors investing heavily in this sunrise sector,” said EGF Secretary Kumar Shukla.
EGF asserted that online gaming is different from gambling, and the Supreme Court and several Supreme Court rulings have reaffirmed the status of online skill-based games as a legitimate business activity protected as a fundamental right under the Indian Constitution.
“While the industry has been quite optimistic about the new developments, including changes in IT regulations and the implementation of TDS on net profits, all this will be moot if the industry is not supported by a progressive GST regime,” said Shukla.
“RIP – Real money gaming industry in India. If the government thinks people will put in Rs 100 to play on Rs 72 pot entry (28 percent gross GST); and if they win Rs 54 (after platform fees) – they will pay 30 percent TDS for that – for which they get a free swimming pool in their living room at the first monsoon – is not happening!” Grover tweeted.
He said it’s time for startup founders to go into politics and be represented.
“It’s been a lot of fun to be a part of the fantasy gaming industry – which is now being killed. $10 billion lost in this monsoon,” Gorver said.
PlayerzPot co-founder and managing director Mitesh Gangar said the higher burdens will also affect the country’s massive gaming industry and deter new players from entering the industry. “The emerging gaming economy will take a major hit, causing economic stress, limiting job creation and limiting economic growth within the industry,” said Gangar.
Federation of Indian Fantasy Sports (FIFS) said the decision will move users to illegal gambling platforms, leading to user risk and loss of revenue for the government.
Deloitte India, partner, Shilpy Chaturvedi said that the council has proposed to increase the tax rate to 28 percent and that too on the entry amount, especially for real money games.
In addition, the GST Council has recommended removing the critical distinction between games of skill and games of chance, which has always been a determining factor in applying tax rate and valuation.
This distinction had its fair share of challenges, not only for the GST, but also under regulatory laws,” Chaturvedi said.
“It seems that the distinction between games of skill and chance has been abolished. This is a setback for the Indian games industry as they expected the levy to be at least marginal and not on full face value,” Shardul Amarchand Mangaldas and co-partner Rajat Bose said.
Taxmann, Lead, Indirect Tax, Kishore Kumar, said the blanket proposal to levy GST on full face value on online gaming may end the in-court debate over ‘game of skill’ versus ‘game of chance’.
“This change will align the game of skill with wagering contracts that characterize gambling and wagering,” said Kumar.
Earlier, Additional Solicitor General N Venkataraman had said that betting money on uncertain events is tantamount to gambling.
He had also said that some states make a mistake in distinguishing between a game of skill and a game of chance in the context of betting.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is being published from a syndicated feed.)
