GST on online gaming: Full rollback of 28% tax unlikely

online gaming

Even as the online gaming industry awaits a review of the 28% goods and services tax (GST) on the sector, the GST Council is unlikely to roll back the levy. According to sources, the government is of the view that the tax has now been accepted by players and collections are also doing well.

However, with industry concerned about payments of GST notices in the past, the issue may be taken up for review.

“It is unlikely that the 28% GST would be withdrawn. The industry and customers seem to have settled into it, as is being indicated by the continued growth in tax collections from online gaming,” said a person familiar with the development.

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But the issue of GST notices for demands on past payments may be relooked given that many firms are worried about paying these. “Many writ petitions have been filed on the issue and will now be heard by the Supreme Court. The ruling is being awaited by companies,” said a second source.

Meanwhile, companies have also pointed out that in case of notices for previous years, the money was already paid to the players and they would not be in a position to pay it.

The issues will be taken up by the GST Council when it meets post the General Elections and formation of the next Union government. Sources have indicated that the Council meeting may take place either in late June or post the Union Budget in late July.

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The Council had said that it would review the 28% GST on online gaming, casinos and horse racing after a six month period. The new tax regime was introduced for these sectors from October 1 and many companies were worried about its impact on players who may not choose to play given the hefty tax burden.

Many industry players and experts are also hoping that an alternative to the high tax of 28% can be worked out to enable the industry to expand further. “Measures such as a temporary lock out for players who have spent long hours or a lot of money on online gaming in one day can be looked into,” said Amrit Kiran Singh, President, Skill Online Games Institute (SOGI).

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“India will need at least two if not three or four growth engines to power us into the top economies of the world in terms of per capita income,” he said, adding that IT is one sector that has been doing well for over three decades.

The Online Games industry is the second industry – due to its sheer size and the natural ability of Indians in this IT related field – that can help take India rapidly to the top, economically, he noted, while calling for a relook at the 28% GST.

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