In this regard, Minister of State for Electronics and Information Technology Rajeev Chandrashekhar said on Monday that on behalf of his ministry, the GST Council will be requested to reconsider the decision of 28 percent tax on online gaming companies. He said that the government is in the early stages of creating a strong framework for online gaming. More than 125 online gaming companies had told the government that the decision to levy a tax of 28 per cent would hit the sector hard and could lead to massive layoffs.
The enterprise value of the online gaming industry is approximately $20 billion. The revenue of this industry is about 2.5 billion dollars. GST Council is of the view that there should be no distinction between ‘Game of Skill’ and ‘Game of Chance’. In the last meeting of the Group of Ministers (GoM), there was a consensus on the proposed tax on these activities, but the GoM did not fully agree on online gaming as Goa had proposed to levy only 18 percent tax on the platform fee of online gaming. . It has been clarified that the enhanced tax will not be applicable on these companies with retrospective effect. In the 50th meeting of the GST Council, it was announced to reduce the tax on restaurants in Cineplex. It has come down from 18 per cent to five per cent.
The Gaming Committee of FICCI, which represents large online gaming firms, had requested CBIC not to increase the tax on online gaming. It said that the online gaming industry will suffer a lot because no business can run with such a heavy tax. Foreign online gaming firms providing services in the country will also have to comply with the regulations made by the Ministry of Electronics and it may be mandatory for these firms to register in the country.
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