July 14, 2023: A group of players from the skill gaming industry on Friday urged the government to reconsider its approach to GST on online gaming. The plea comes in response to the recent decision by the GST Council to impose a 28% GST on the full face value of online gaming, clubbing it with horse racing, lottery, and casino.
In a letter addressed to Finance Minister Nirmala Sitharaman, they said, “This decision would increase the entry cost for us to 28 rupees per 100, compared to the previous rate of 1.8, rendering online gaming financially burdensome and entirely unattractive as a source of entertainment or livelihood. It will be detrimental to the gaming industry and the player community, the group of online gamers from various gaming backgrounds, including card games, AAA games, e-sports, fantasy games, and casual online games.
The players who have signed this letter have represented India on the world stage at tournaments such as Asian Games, Commonwealth Games, World Poker Series. Some of the renowned names include VS Rathanvel, a Chess Grandmaster, and Moin Ejaz, esports player and medalist at the Commonwealth Esports Championships (CEC).
High tax will drive players to offshore gambling platforms
The GST decision comes after the government introduced a 30 per cent TDS on net winnings for online games earlier this year. The increased tax rate will result in higher costs for players and may induce many unassuming and innocent players to seek offshore platforms to continue playing.
“This raises issues of user safety, as Indian platforms have implemented measures to protect users from abuse and mistreatment, particularly for players under the age of 18 and have now come under a robust and strict regulatory regime, which is being administered by MeitY. Offshore platforms lack such safeguards, making minors vulnerable to potential harm,” they said.
By failing to differentiate between skill-based games and gambling, this policy puts at risk the progress we have made in terms of user protection and regulation, the letter added.
They have sought a collaborative approach involving representatives from the gaming community that would lead to a more balanced and informed decision regarding the taxation of online gaming, and support its growth in line with Prime Minister Modi’s vision of making India a global leader.
The concerns raised in the letter resonate with many in the gaming industry. The Internet and Mobile Association of India (IAMAI) said the new tax will put Indian companies at a disadvantage in the global online gaming market, “Online gaming is distinct from gambling and betting. Hence taxing India’s legitimate online gaming industry with gambling activities will not only massively dent the burgeoning online gaming sector but will also threaten to make the entire $20 billion Indian online gaming sector an unviable business model.” The All India Gaming Federation (AIGF) echoed similar sentiments: “This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms.”
