GST Council To Meet Next Week: Real-Money Gaming Cos May Get Clarity On 28% GST Regime

As the industry is crying havoc over 28% GST on real-money gaming, the GST Council is likely to hold an online meeting on August 2 to take a final decision on how to levy GST on online gaming, casinos and race courses.

The GST Council is expected to give clarity on how it plans to impose the 28% GST in the aforementioned areas — either on the entry fee or each bet.

Although there is no backtracking on the proposal, details regarding the required legal amendment and tweaks in rules will be put up before the council at the meeting, the Indian Express reported.

On July 11, the GST Council gave a major blow to the real-money gaming industry by imposing a 28% GST on the full face value for real-money gaming platforms, with no distinction between games of skill and games of chance.

Earlier, only 18% GST was applicable on the platform fee charged for games of skill. Industry associations and leading startups expressed disappointment with the new rules, which they believe will make the industry ‘disappear’.

A group of over 100 gaming startups and a few industry federations wrote a letter to the government asking it to reconsider the decision to levy a 28% GST on the sector on full value.

“The industry stands in unison to request a viable and progressive GST regime and appeals for reconsideration of the current recommendation,” the letter, which was addressed to the Prime Minister’s Office and the Ministry of Electronics and Information Technology, read.

Later, as many as 30 domestic and Indian investors, including Kalaari Capital, Peak XV Partners, Orios Venture Partners, Tiger Global Management, Alpha Wave Global, and Steadview Capital wrote to the Prime Minister’s Office to reconsider the decision.

“The current GST proposal will set up the most onerous tax regime for the gaming sector globally, which will lead to a potential write-off of the $2.5 Bn capital invested in this sector. This will also adversely impact prospective investments to the tune of at least $4 Bn in the next 3-4 years,” the investors said.

Meanwhile, a group of 45 gaming studios wrote to the Prime Minister’s Office, the Ministry of Electronics and Information Technology and the Ministry of Information and Broadcasting, seeking a clear distinction between video games and real-money gaming after the GST Council’s recent decision.

According to a KPMG report, the Indian gaming industry is expected to grow to a size of $3.9 Bn by 2025. The sector is expected to create over 1 Mn jobs by 2023.