Online Skill-Based Gaming Industry Makes Case Against 28% GST Slab

The industry of skill-based gaming has appealed that the goods and services tax (GST) levied be below 18%. The industry makes this case after a move was made to increase it to the highest 28% category. This increase will not only be bad for the sector but also for the government as well as the players. For one, the tax increase will have a catastrophic effect on the industry, most likely leading to losses in revenue.

Moreover, the hit on the regulated industry will encourage offshore operators who would host games outside India, thus circumventing the country’s tax jurisdiction. If that happens, the government will lose out on tax revenue and players will be at the mercy of unscrupulous operators.

Thus, an association of the gaming platforms has appealed before the authorities to retain the current GST level for the industry. The services of casinos, online gaming companies, and horse racing companies are at 18% GST at the moment.

A panel of ministers set up by the government for better valuation of gaming companies suggested this 28% increase. The GST Council has taken the issue seriously as it will decide the hiking rate on online skill-based gaming to 28%.

However, it is not a done deal as the council will take further deliberations at the officer level before concluding. What is certain is that this increase will disrupt other sectors as well, including banking, fintech, semiconductor, telecom, payment gateway, sports, and entertainment.

Trivikraman Thampy, Game24x7’s co-chief executive, says the council currently charges GST on platform fees rather than on the entire revenue. He further stated that the optimal taxing bracket as highlighted by international best practices was between fifteen and twenty per cent.

That means the current GST being charged is within the stipulated range, thus reducing the prevalence of illegitimate operators. Moreover, skill-based games are vastly different from games of chance and do not constitute gambling or lottery.