The Internet and Mobile Association of India (IAMAI) urged the GST Council to keep the GST on online gaming at 18 percent, saying that any increase would harm the industry’s overall health. Various stakeholders are currently discussing raising the GST rate for the online gaming industry to 28 percent.
Given that casual games are a sub-segment of online gaming, it’s unclear whether this GST rate of 28% will apply only to real money games or also to casual games.
“Any such increase in the GST rate is likely to turn businesses in the sector unviable, leading to complete shutdown which, in turn, will result in loss of a large number of jobs,” the industry body said in a statement.
This will also result in “a loss of investor-confidence debilitating India’s online gaming industry, which is currently witnessing fast and exponential growth of 35 per cent CAGR,” the IAMAI added.
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The Indian online gaming industry is expected to reach $5 billion by 2025, according to a recent report by BCG and Sequoia. According to the industry body, raising the GST rate will erode the tax base on the one hand while encouraging the rise of grey markets on the other.
“It is also essential to treat only the Gross Gaming Revenue (GGR) or Platform Fee as liable to GST at 18 per cent and to treat the ‘prize pool’ as the actionable claim as per Entry 6 of Schedule III of the CGST Act, 2017,” it added.
Several industry experts have spoken out against bundling online gaming in with racing, gambling, and betting in the 28 percent GST bracket. The Group of Ministers (GoM) on casinos, racetracks, and online gaming met earlier this month to discuss a variety of topics, including possible GST rates and technicalities.
Conrad K. Sangma, GoM Convener and Meghalaya Chief Minister, said the meeting also discussed whether online gaming should have a common or different GST rate. Sangma estimates that the annual turnover of online gaming is around Rs 30,000 crore, with annual growth of 25 to 30%. Before the GoM’s next meeting later this month, a few more technical issues needed to be addressed.
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