Online Games, Casinos To Be Levied 28% GST

Today, a GST council meeting is all set to be hosted to discuss the tax slab for the online gaming industry. Previously, the panel had expressed its willingness to place the online gaming category, which involves companies that offer games with stakes sich as rummy in the 28 percent tax slab. This move might stun the growth of the emerging online gaming market.

28% Tax On Online Games

Currently, online games involve an 18% GST, which is levied on the players' fees that is accumulated by the participating players of the game. This fee that is collected and retained by the provider is termed gross gaming revenue (GGR). However, the GST council has expressed interest in levying a GST of 28% on the gross gaming value (GGV), which is the overall money deposited by users in a prize pool.

Applying GST on GGV will lead to a whopping 900 percent increase in taxes and will kill the fast-growing industry, claims Amrit Kiran Singh, an All India Gaming Federation (AIGF) advisor cites Livemint.

Future Of Online Gaming

It could mean that online gaming companies will pass the burden of meeting the taxes to the players and reduce the prize pool leading users to shift to gaming platforms or service providers in other countries. Also, it might lead to professional gamers who create offshore accounts to avoid paying high taxes.

It remains to be unclear if the new GST rules will be applicable only to the real money gaming firms or to the e-sports firms that do not handle transactions in the form of real money. Also, it is speculated that the GST Council by the GoM's (group of ministers) decision could club skill gaming with the gambling titles. This will contradict an old Supreme Court view on the titles with stakes.

The apex body stated that the online games that involve stakes such as rummy do not account for any form of a chance of gambling instead of requiring skills. The same views have been echoed by the gaming industry that views rummy, poker, and ludo as skill-based games. The GST council is headed by Nirmala Sitharaman, the Union Finance Minister and comprises state leaders. They will put the horse racing firms and casinos also in the 28% tax slab.