Consensus On Online Gaming Taxation Still A Far Cry With GoM Yet To Reach A Conclusion

Govt To Meet Relevant Firms, Intermediaries To Discuss Online Gaming Rules Today

SUMMARY

The panel agreed to tax the supply of actionable claims at 28%

However, it could not decide to levy charges on the net amount or the gross gaming revenue

The panel members could not come up with a conclusion on the issue despite several rounds of deliberation

While the online gaming industry is waiting for a verdict on goods and services tax (GST), the group of ministers (GoM) looking at taxation of online gaming, races, and casinos has not arrived at a consensus yet on the valuation on which tax rate should apply.

Ahead of the upcoming GST council meet on Saturday, Meghalaya Chief Minister Conrad Sangma-headed panel submitted its second report to Finance Minister Nirmala Sitharaman, Business Standard reported.

The panel agreed to tax the supply of actionable claims at 28%. However, it could not decide on the levy on the net amount (after removal of prize money) or the gross gaming revenue (GGR).

The panel members had diverse views on the issue, they could not come up with a final conclusion on the issue despite several rounds of deliberation. Hence, the council will take a call on a further course of action now.

Additionally, the panel members also discussed whether to have different approaches for taxation as casinos and online gaming work on different fundamentals. However, some states agreed to distinguish, while some states did not.

Earlier, it was reported that the panel of state finance ministers may recommend levying a uniform GST of 28% on online gaming irrespective of the classification between the games of skill and the games of chance.Considerably, the industry has also been asking for a clarification between two segments.

The GoM, under Meghalaya Chief Minister Conrad Sangma, recommended the GST Council to levy 28% GST on gross sales value earlier this year. Following this, the Council requested the GoM to reconsider its report.

Online gamers in India grew to about 400 Mn by mid-2020 from about 250 Mn in 2018, making the country the second-largest base of online gamers after China, as per a KPMG report.

This has led to the emergence of a large number of gaming startups in the country over the last few years, including unicorns like MPL, Dream11, Games 24×7

According to Inc42 data, Indian gaming startups raised $344 Mn in funding in the first half of 2022.