How the volumes in the online gaming behave will be known only once the higher tax rate becomes applicable.
The 28 per cent goods and services tax (GST) levy on online gaming could see revenue collection from this sector jump as much as 12 times to Rs 20,000 crore in FY24 if growth rates remain the same, said revenue secretary Sanjay Malhotra.
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While the levy led to an outburst from the gaming industry which has termed it a death knell, Malhotra played down the concerns in an interview with Moneycontrol.
How the volumes in the online gaming behave will be known only once the higher tax rate becomes applicable, said Malhotra.
On July 11, the GST Council decided to levy 28 per cent on online gaming on the full face value of the game or the payment made to the platform or gaming website. However, the effective date for the levy will be made known after amendments to the GST law, said Finance Minister Nirmala Sitharam after the council meeting.
Malhotra defended the decision saying that the tax authorities have to follow the principle of equity. If online gaming is treated as betting or gambling, and if betting, gambling, and lottery are taxed at 28 per cent, then online gaming also has to be taxed the same way, he said.
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Even if online gaming is treated as entertainment, many entertainment-related activities such as entry to a sporting event, casinos or a horse racing club are taxed at 28 per cent, he pointed out.
Online gaming platforms currently pay 18 per cent GST on the platform fees, also known as Gross Gaming Revenue (GGR) and not on the full value of the transaction, also known as Contest Entry Amount (CEA).
