Online Gaming Industry Suffers Big Jolt As Government Imposes 28 Percent GST

The online gaming industry, which has grown rapidly in the last few years, has suffered a major setback. The Goods and Services Tax (GST) Council has agreed to levy a GST of 28 per cent on the full value of online gaming, horse racing and casinos. 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. . In the 50th meeting of the GST Council, it has been announced to reduce the tax on the restaurants present in the Cineplex. It has come down from 18 per cent to five per cent.

The gaming committee of FICCI, which represents major online gaming firms, has requested the Central Board of Indirect Taxes and Customs (CBIC) not to increase taxes on online gaming. It says that the online gaming industry will suffer a huge loss because no business can run with such a high tax. Finance Minister Nirmala Sitharaman, who chaired the GST Council, said that IGST has been removed on cancer medicine and food used for special purposes in the treatment of certain diseases. He said, “I am happy that we have reached a decision. Some changes will be made in the GST law. The full value of online gaming, horse racing and casino will be taxed at 28 percent.”

The E-Gaming Federation has termed the decision to impose 28 per cent tax on online gaming as unfortunate. It says that this tax will give a big blow to the industry. This will increase the number of illegal operators in this market and make it difficult for online gaming firms to stay in business. Even before this, the definition of online gaming and tax on it was discussed in the meetings of the GST Council, but no consensus could be reached on it. This industry is growing rapidly but the increase in tax may make it difficult for it.

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