After the two-day GST board meeting held on July 23-24 in Bengaluru, the GST Council’s Group of Ministers (GoM) talked about the tax rates to be imposed on the online gaming industry, ranging from 18% to 28%.

Casinos, horse racing, lotteries, pay-to-play, and other chance-based games are being combined with online skill-based games. This, alongside the increment of tax rates being imposed on all contest entry amounts (CEA), has created a disturbance in the online gaming industry.

The 18% GST is imposed on the platform’s commission and taken from the pool of cash invested by the players in limited amounts on skill-based games, which is known as the Gross Gaming Revenue.

Notwithstanding, with the new tax policies being examined, a 28% GST can be imposed on the full contest entry amount. The expansion in the tax slab may adversely affect the gaming platforms’ net revenues and the overall gaming environment.

In addition, combining skill-based games with chance-based games for the new tax collection strategies obscures the difference between the two, which have been made and upheld by Indian courts for more than 60 years. The two are different with regards to the law as well as practice, and in this way, they can’t be treated on par with one another.

The GoM, driven by Meghalaya CM Conrad Sangama, has made attempts to figure out the workings of the online gaming industry and has held gatherings with the industry leaders to address the worries raised by them to rethink the tax rates.

According to industry sources, these issues have been raised by the All India Gaming Federation (AIGF) during their meeting with the GoM, whose representatives, as per sources, expressed that such a type of tax collection will be devastating for the gaming industry and will nip out the smallest potential the industry has towards contributing to the Indian economy.

There has been no decision concerning the reevaluation of tax rates yet. Yet, the GoM will meet again in the first week of August and has been given time till August 10 to submit their last report, and the industry is eagerly waiting for a conclusion.

Credit: Sambad