The Internet and Mobile Association of India (IAMAI) has urged the Goods and Services Tax (GST) Council to maintain the 18 per cent GST rate on online gaming. The IAMAI said that GST should continue to be levied on platform fee only at 18 per cent and any hike in GST rates shall be “detrimental to the overall wellbeing of the industry, seriously impacting the industry’s contribution to the nation’s economy through revenue generation, livelihood creation and foreign investments,” as per its official release.
It also stated that there is no clarity as to whether the hiked GST rate will apply only on real money games or casual games as well since the former is a sub-segment of online gaming.
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The not-for-profit industry body believes that “any such increase in the GST rate is likely to turn businesses in the sector unviable, leading to complete shutdown, which in turn will release in loss of a large number of jobs and a loss of investor-confidence debilitating India’s online gaming industry”.
As per the IAMAI, the gaming industry is witnessing “fast and exponential growth” at 35 per cent CAGR. Citing Entry 6 of Schedule III of the CGST Act, 2017, the release further stated, “It is also essential to treat only the Gross Gaming Revenue or Platform Fee as liable to GST at 18 per cent and to treat the ‘prize pool’ as the actionable claim.”
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CEO of online gaming portal Games 24×7 Trivikraman Thampy told news agency PTI that hike in taxation on gaming would encourage offshore operators who can avoid Indian tax jurisdiction by hosting games in other country. He explained, “It would be a triple whammy- the industry loses out, the government loses out on tax revenue and players loses out as they would be exposed to unscrupulous operators.”
The issue has gained traction as the Group of Ministers is likely to meet before May 18 to deliberate on the decision to hike 18 per cent GST on casino, race course and online gaming to 28 per cent. After this meeting, the group will submit its report to the GST Council.
(With agency inputs)
