GST Law Committee Wants Clear Definition Of ‘Game Of Chance’ & ‘Game Of Skill’

While the group of ministers (GoM) is yet to decide the goods and services tax (GST) rate applicable for online gaming, the Law Committee under the GST Council has suggested to clearly define and classify the ‘game of chance’ and ‘game of skill’ before taking any decision on taxation.

According to the committee, a clear definition is a necessity to avoid further confusion, as well as prevent multiple litigations, The Economics Times reported.

The committee’s suggestion came when the GoM sought its views on the legal aspect of GST on online gaming.

“The committee has suggested that there is no clear definition between the game of skill and game of chance and the GoM has to first rework on the report with clear definition and classification,” a person aware of the discussion was quoted as saying.

As the Ministry of Electronics and Information Technology (MeitY) is already working on the framework, the committee has suggested the GoM to wait for MeitY’s framework. The government was also reportedly examining the need for centralised regulations for the gaming industry. In June, the Centre also set up an inter-ministerial committee to oversee the gaming industry in the country.

For a long time now, the gaming industry has been stressing on the need for a clear distinction between game of chance and game of skill. Since the online gaming industry has seen different regulations from different experts, industry experts always said that it is important to have a clear definition for skill-based gaming, as well as standard parameters on how it can be distinguished from games of chance.

In addition, the regulatory instability makes it difficult for gaming startups to attract investors, gaming startups told Inc42 earlier. In the first half of 2022, the gaming startups have raised $344 Mn funding, according to Inc42 data.

Last month, Tamil Nadu Governor RN Ravi gave his assent to the ordinance, passed by the state cabinet, banning online gaming with stakes in the state. It joined the list of a number of other states including Telangana, Andhra Pradesh, Karnataka, Kerala which issued several notifications to ban online gaming over the last few years.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.