In this regard, Minister of State for Electronics and Information Technology Rajeev Chandrashekhar said on Monday that his ministry will request the GST Council to reconsider the decision of 28 percent tax on online gaming companies. He said that the government is in the initial stages of creating a strong framework for online gaming. More than 125 companies associated with online gaming had told the government that the decision to impose a tax of 28 percent would cause huge losses to the sector and could lead to a large number of layoffs.
The enterprise value of the online gaming industry is approximately $20 billion. The revenue of this industry is about 2.5 billion dollars. GST Council believes that there should be no difference between ‘game of skill’ and ‘game of chance’. In the last meeting of the Group of Ministers (GoM), there was a consensus on the proposed tax on these activities, but there was no complete consensus of the GoM on online gaming because Goa had proposed to impose only 18 percent tax on the platform fees of online gaming. . It has been clarified that the increased tax will not be applied on these companies retrospectively. In the 50th meeting of the GST Council, it was announced to reduce the tax on restaurants in Cineplex. It has reduced from 18 percent to five percent.
FICCI’s Gaming Committee, representing large online gaming firms, had requested CBIC not to increase the tax on online gaming. It said that the online gaming industry would suffer a huge loss because no business can run with such heavy taxes. Foreign online gaming firms providing services in the country will also have to follow the regulations made by the Electronics Ministry and it may be mandatory for these firms to register in the country.
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