Indian online gaming companies and associations have appealed to the government to reconsider its recent GST decision on face value. The companies claimed that the decision has put the industry in a state of “significant distress” and that it could have “devastating implications” for them, including the closure of their businesses.

Taxing online games to the point where they are “unviability,” runs counter to the Prime Minister’s ambition to be a global leader in online gaming, the letter was signed by Mobile Premier League and Winzo, as well as industry associations.

This development comes after the GST Council decided to impose a single 28% tax at full face value. The government is expected to table a legal amendment in the Monsoon session of Parliament to allow the inclusion of online gaming and horse racing in actionable claims. This will make it possible to tax these categories with no discrimination in a game of skill and chance.

According to the companies, the amendment will lead to an “unprecedented” 400-500% rise in the GST burden which the industry “will have no choice but to pass on to 400 million Indians”.

“The user, who is already required to pay 30 per cent income tax on winnings, will be unable to bear such a large increase in cost and will shift to black market operators to avoid the increase in playing costs and reduction in the winning pool. This will result in the proliferation of the underground black economy and numerous criminal activities,” they said.

The companies said that they were willing to pay 28% GST on the platform fee. “…currently, the industry is paying 18% GST on GGR/ platform fee. An increase of GST to 28% on the GGR/ Platform fee will result in a 55% increase in GST quantum. Even though such an increase will be challenging for the industry, the industry supports this increase to be a contributor to nation-building,” they said.

However, the government has stated that it has no plans to shut down any industry.

“Our agenda is not to end any industry… all types of businesses have to function… There was discussion on the moral question that on one front, you do not want to end an industry. But that does not mean that you give more incentives to them than essential goods… all states participated in this decision which has been pending for the last 2-3 years. We could take the decision because every state clearly participated in it,” Finance Minister Nirmala Sitharaman had said earlier this week.

Credit: The Indian Express