As the GST Council’s meeting on August 2 approaches to discuss the 28% tax on real-money gaming, online gaming companies are showing a difference of opinion on the matter. The disagreement revolves around whether the GST should be applicable on the value of deposits made by players or on the gross gaming revenue.
Larger Online Gaming Companies Open to Proposed Tax with a Condition
Larger gaming companies are now willing to accept the proposed 28% GST tax. They want it applied on the value of deposits made by players. This approach aims to avoid repetitive taxation and ensures a fair tax structure for the industry.
Smaller Companies Insist on GST on Gross Gaming Revenue
In contrast, smaller gaming companies advocate for the tax to be levied on the gross gaming revenue. They argue that this approach would be more practical and align with the industry’s earlier stance of advocating for GST on gross gaming revenue.
Debate on Distinction Between Games of Skill and Chance
The GST Council’s decision to impose a 28% tax on the full face value for real-money gaming platforms raised concerns within the industry. The council did not outline any distinction between games of skill and games of chance, which previously had an 18% GST applicable to the platform fee for skill-based games.
Online Gaming Industry to Make Final Representation Before GST Council’s Meeting
The gaming industry is making a final representation to the government. Different opinions have emerged at a crucial time. The All India Gaming Federation (AIGF) discussed the issue in a meeting. A proposal to divide online gaming into ‘large-size tournaments’ and ‘quick continuous games’ sparked controversy.
Initially, the gaming industry collectively criticized the GST decision, expressing concerns about its impact on smaller startups and revenue for larger firms. Subsequently, a group of over 100 gaming startups and industry federations wrote a letter to the government urging a reconsideration of the 28% GST charge on the sector. Additionally, investors and gaming studios also reached out to the Prime Minister’s Office and relevant ministries seeking clarity and differentiation between video games and real-money gaming.
