Online gaming industry raises concern over possibility of revised GST rates
E-Gaming Federation (EGF), All India Gaming Federation (AIGF) and Federation of Indian Fantasy Sports (FIFS), have expressed concern at the recent media reports that suggest that the Goods and Services Tax (GST) rate on online skill games may be increased from existing 18 per cent to 28 per cent.
In a joint statement issued, the three industry bodies said that what is more worrying is that some media reports suggest that the tax may be levied on total pool (prize money pooled plus the platform commission) and not on Gross Gaming Revenue (GGR). The latter, if implemented, they said, will mean the demise of the online skill gaming industry in India.
Sameer Barde, CEO, EGF, said, “such a step is not only in dissonance with international best practices, but is also violative of the principles of GST. The online skill gaming operator platforms charges a fee, known as GGR, and pays tax on that. If you were to charge an increased tax rate on the entire quantum (pooled money and commission), it is not only principally incorrect but will also annihilate this sunrise sector.”
Highlighting that the sector has immense economic benefits, the industry associations have appealed to the Council to understand the salience of games of skill and will take a decision considering international taxation best practices.
“Any regulations or taxation related to skill gaming should not be treated at par with games of chance, as these are divergent activities both in terms of law and practice,” said Anwar Shirpurwala, CEO, FIFS.
With a combined membership of around 100 operators, between them, EGF, AIGF and FIFS, represent more than 90 per cent of the online skill gaming market in India. The sector has witnessed investments from global venture capital and private equity firms. In the last six years, the sector has received foreign investment of over $2 billion. The sector already employs around 50,000.
June 28, 2022