GST Council has levied 28% GST on online gaming

Onling Gaming

At its 50th meeting in New Delhi, The Goods and Services Tax Council after has agreed to levy 28% GST on online gaming at full value. It has also made it clear that there will be no distinction between ‘game of skill’ and ‘game of chance’. The GST Council believes that the decision will help to regulate the online gaming industry.

After this decision was announced to the public, we saw mixed reactions from industry experts. But government confirmed that the intention was not to target any industry.

“The GST Council’s intention is not to hurt the online gaming industry or states with casinos. A few states shared their concerns. But there is a moral question: can we encourage them more than essential goods? So I am proud to say that the GST Council discussed and understood the matter deeply and took a decision which had been pending for 2-3 years. The issue is very complex,” Finance Minister Sitharaman said.

Industry experts believe that the decision will ultimately hurt users. Gaming platforms will pass on taxes to users by raising ticket prices.

The All India Gaming Federation (AIGF) which represents gaming companies like Nazara, GamesKraft, Zupee, and Winzo calls this decision unconstitutional, irrational, and egregious.

“The GST Council’s decision to levy a 28% GST on online games without distinguishing between games of skill and chance poses a severe threat to the growth and sustainability of the online gaming industry in India,” the statement issued by the Management of Kick Games Studios Pvt Ltd reads. “These regressive measures disregard years of established legal precedents and unjustly associate online gaming with gambling activities and will have a negative impact on the growth of the real-money gaming segment, which accounted for 77% of India’s gaming sector revenues in 2022.”

The online gaming market is rapidly growing in India. During covid-19 pandemic, online gaming saw a surge with new people joining. Sports betting apps like Dream11 have also earned big during big tournaments. Dream11’s gross revenue was more than 4,000 Cr in FY22. Several Rummy and Teen Patti companies are also earning big. Now that the government has decided to put it in the 28% tax slab, the government will surely earn well.

GST Council exempted cancer-fighting drugs, medicines for rare diseases, Food for Special Medical Purposes, and satellite launch services. GST rate on food items and beverages in cinema halls will now be taxed at 5% as compared to 18% in the past.

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