Amid industry concerns over the imposition of a 28% GST on real-money gaming, the GST Council is gearing up for an online meeting on August 2. During the meeting, the council will make a final decision on how to levy GST on online gaming, casinos, and race courses. The main point of contention is whether the 28% GST should be imposed on the entry fee or on each bet.
Clarity on Implementation of 28% GST
The proposal for the 28% GST remains unchanged. The GST Council is expected to provide further clarity on the required legal amendments and rule adjustments. The Indian Express reported this information.
Real-Money Gaming Industry Faces Major Blow
On July 11, the GST Council delivered a significant blow to the real-money gaming industry by implementing a 28% GST on the full face value for real-money gaming platforms, without differentiating between games of skill and games of chance. Prior to this, only an 18% GST was applicable to the platform fee charged for games of skill. Industry associations and leading startups expressed disappointment with the new rules, fearing the adverse impact on the industry.
Appeals for Reconsideration
In response to the 28% GST on the sector’s full value, a group of over 100 gaming startups and several industry federations addressed a letter to the government, urging it to reconsider the decision. The letter, directed to the Prime Minister’s Office and the Ministry of Electronics and Information Technology, pleaded for a viable and progressive GST regime.
Investors Also Voice Concerns
Domestic and Indian investors, including prominent names like Kalaari Capital, Tiger Global Management, and Orios Venture Partners, joined forces and wrote to the Prime Minister’s Office, expressing their concerns and urging reconsideration of the current GST proposal. They warned that the proposed GST regime would have severe implications, potentially leading to a write-off of the $2.5 billion invested in the sector and hindering prospective investments worth at least $4 billion in the next 3-4 years.
Furthermore, a group of 45 gaming studios sent letters to various government offices. They seek a clear distinction between video games and real-money gaming following the GST Council’s recent decision.
Despite the ongoing concerns and uncertainties, a KPMG report predicts a robust growth trajectory for the Indian gaming industry. The report estimates a size of $3.9 billion by 2025 and the creation of over 1 million jobs by 2023.
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