Gst: GST Council agrees to levy 28% tax on online gaming, leaves industry unhappy – Times of India
The 28% taxation has been in the offing for the gaming companies as the Group of Ministers (GoM) in their previous meeting had broadly agreed for the proposed taxes on the said activities, there was no consensus on online gaming as Goa proposed to impose only 18 per cent tax on platform fees. 28% is the highest GST tier. The effective date for 28 percent GST levy on online gaming will rollout after amendments to GST law.
What FM said
Finance minister Nirmala Sitharaman said that GST Council would work closely with the IT ministry on recognizing games under the online gaming category. on 28% GST, she said that the decision on taxation was made after considering the moral dilemma of prioritizing online gaming over essential goods, which have been subject to GST for some time.
“Our intention is not to end online gaming, casino, horse racing. But all these have become so complex that go this route or go that route, each route has transparency to a certain extent, but after that, it is opaque,” she said.
Industry unhappy
The decision is not in favour of gaming companies who have been opposing 28% GST on online games. A group comprising some of the biggest online gaming companies represented by the FICCI Gaming Committee has urged the Central Board of Indirect Taxes & Customs (CBIC) not to hike the GST rate for the sector to 28 per cent. They have said that it would be “extremely detrimental to the survival of the online gaming industry as no business operations can survive with such high taxation.”
“The new tax rate of 28% on Gross Gaming Value is an unexpected move by the GST Council, which will have far-reaching consequences for the industry and question its basic viability. Not only will this burden hinder the growth of this nascent industry, its application will compress new innovation and opportunities. This decision does not take into account the pleas of the industry, global precedents, and even counters the favourable regulatory environment being built up for online gaming in recent months. Businesses have a legitimate concern that this move will push users towards illegitimate betting and gambling operators that don’t follow the laws of the land,” said Siddharth Sharma, SVP, Business Strategy, Head Digital Works (A23).
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