The latest announcement of 28% GST on online gaming has given a knee-jerk to the industry, even though it does not come as a surprise to India Gaming Inc.
Back in Sep 2022, one of the leading real money gaming (RMG) companies were served the largest-ever tax notices. The fee slapped was far greater than the company’s cumulative revenue since inception as the GST council had calculated tax liability per the highest slab (28%) on the total pooled money.
Currently, the platforms pay 18% GST on the revenues they earn via commissions.
Though the case was quashed by a state high court in May this year, it served as an eye-opener to the imminent threat to the ecosystem and its fortunes!
RMG Industry is slated to be worth over Rs. 10,000 crore ($1.2 billion) by 2024, according to a report by EY and FICCI. The industry has had to fight the “gambling” tag. They argue that their offerings like card games and fantasy sports are games won by skill, not chance. Notably, the apex court had recognized many of their products to be “games of skill”.
The latest news has triggered a barrage of reactions.
Understandably, industry experts are opposing it calling the move unviable for the industry to survive. Other reasons cited are job loss for 1 lakh people employed across 1000 companies, loss of investor confidence, possible cutback on FDIs & finally pushing users to illegitimate & exploitative platforms.
There are also arguments hailing it to level the playing field between online and traditional gaming companies. The lack of federal laws and regulations for the online gaming industry does not help its cause. The government rallies for the need for consumer protection while drawing a parallel with the essential goods industry for taxation.
It would be interesting to note how the industry is shaped going forward!
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