28% Tax on Online Gaming: How did the industry react?

In its 50th meeting in New Delhi, the Goods and Services Tax Council announced to levy 28% GST on online gaming, horse racing and casinos. Fantasy gaming platforms were earlier given the title of ‘Game of Skill’ rather than ‘Game of Chance’. 

On Tuesday, the Finance Minister, Nirmala Sitharaman defended the decision by the GST council by saying that there should not be any distinction between ‘Game of Chance’ and ‘Game of Skill’. The question that arises now is how does this decision affect the gaming industry. 

How did the industry react?

The stakeholders in the gaming industry have called the decision a big blow to the industry. They believe that this will not only hamper the already existing companies but also discourage new start-ups. Ashneer Grover, former Co-Founder of BharatPe ventured into the fantasy gaming world with his fantasy gaming app ‘CrickPe’, criticized the move in a tweet. Grover believes that it is time for startup founders to enter politics so there is a proper representation of their industry.

Amrit Kiran Singh who is a Chief Strategy Advisor to the Founders at Gameskraft believes that this decision hampers the growth of the Indian companies as well as will help rival markets in China and the USA. Singh said, “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.”

Many stakeholders believe that grouping skill-based games with casinos and betting is wrong. Aaditya Shah, COO, IndiaPlays has called for the government to provide a distinction between skill-based games and casino games. Shah said, “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.”

Many fear that the decision of increasing taxes will also result in decreasing employment. The gaming sector in India employs thousands of people today and this increase in taxation will result in the loss of jobs. “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

Ashneer Grover in another tweet has called out the government for its hypocrisy or in his own words ‘Doglapan’. He has pointed out that star cricketers like Virat Kohli, MS Dhoni and Sourav Ganguly endorsed online gaming.

Also Read: Enhancing Gaming Experience: Benefits of Gaming Headphones

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