Following the GST Council’s recent decision to impose 28% GST on real-money gaming, the Centre plans to introduce provisions mandating the registration of offshore gaming platforms. Revenue Secretary Sanjay Malhotra addressed the media after the 51st meeting of the GST Council on Wednesday (August 2), stating that the registration process for offshore online gaming would be simple.
Stringent Action Against Non-Compliant Companies
Malhotra issued a warning to companies that violate the new registration norms. The IT Act will impose consequences on them. The Directorate General of GST Intelligence (DGGI) will set up a monitoring cell. This cell will track companies operating without paying taxes to ensure compliance.
Gaming Industry Responds to GST Council’s Decisions
The All India Gaming Federation (AIGF) appeared unfazed by the government’s plans, stating that previous efforts to block offshore games platforms have been ineffective so far. However, industry stakeholders expressed concern about the “blow hot, blow cold” approach towards online gaming. They highlighted the conflict between encouraging the sector through “light touch” regulations by MeitY and imposing punitive taxation under GST.
Offshore Gaming Companies Under GST Levy
The GST Council has decided to mandate GST registration requirements for offshore companies. Companies looking to relocate abroad will not be exempt from the GST levy. These companies need to discharge GST in India.
Amendments to the GST Act and State Concerns
Finance Minister Nirmala Sitharaman announced that the GST Act would be amended to include the 28% GST levy. The ongoing Monsoon Session of Parliament is expected to discuss this legislation.
Some states expressed concerns about the decision to impose 28% GST on real-money games. Delhi requested a review of the levy, while Sikkim and Goa urged reconsideration of the GST on gross gaming revenue (GGR). Tamil Nadu’s finance minister questioned whether the tax regime would nullify the state’s ban on online games.
Several other states, including Maharashtra, Gujarat, Uttar Pradesh, and Himachal Pradesh, advocated for the swift implementation of the 28% tax, citing prolonged debate on the matter.
The GST Council’s decision on 28% GST for online real-money gaming triggered intense discussions within the Indian online gaming industry. Despite criticism from industry bodies and startups, the GST Council stands firm on its decision. The impact of this move on India’s gaming industry, home to unicorns like Dream11 and MPL, is yet to be seen.
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