Last updated: July 12, 2023, 1:34 PM IST
Finance Minister Nirmala Sitharaman stated at a press conference that online gaming, horse racing and casinos will all be taxed at 28%. (representative image: AFP)
Shares of online gaming stocks like Nazara Technologies and Delta Corp suffered huge losses
28% GST on online gaming: c in early Wednesday trading. Shares of Delta Corp opened on their 10 per cent lower circuit of Rs 222.15 and later crashed as much as 28 per cent to Rs 178.20, near its 52-week low, after the GST Council gave approval to cut 28 per cent GST levy on online gaming, horse racing and casinos at full value.
Meanwhile, Nazara Technologies’s cracked more than 14 percent in early deals.
In a major setback for the country’s online gaming industry, the GST council on Tuesday decided to impose a 28 percent tax on the full value of money paid by users. In addition, GST will be imposed on online gaming without any distinction whether based on skill or chance.
Increasingly, Nazara Technologies said the GST Council’s decision to levy a 28 percent goods and services tax (GST) on online gaming will only apply to its company’s skills-based gaming segment, which contributed 5.2 percent to the company’s total consolidated sales during FY23.
“The company will take proactive steps to mitigate the potential impact on this segment of our business, and we expect minimal impact on our overall revenue,” it said in an exchange filing. “The company remains committed to its growth agenda and will continue to pursue organic and inorganic opportunities in various segments in which it operates,” the company said.
GST Council meets outcome
“I’m happy to say we’ve come to a decision. There will be some changes to GST legislation. Simply put, online gaming, horse racing and casinos will be taxed at 28 percent and taxed at full face value,” said Finance Minister Nirmala Sitharaman.
The Treasury Department explained that the changes to GST legislation will be made to specify that tax will apply to the face value of chips purchased in the case of casinos, to the full value of bets placed at bookmaker /totalizer in the case of horse racing and to the full value of the bets placed in the case of online gaming.
In addition, the GST is applied uniformly to online games of chance, without any distinction between games that require skill or games that rely on chance.
Industry players expressed their concerns. E-Gaming Federation secretary Malay Kumar Shukla called the move “an extremely unfortunate decision as imposing a 28 percent tax on the full face value will lead to a tax increase of almost 1,000 percent and will prove catastrophic for the industry”.
