Industry bodies voice concern regarding highest tax slab on online skill gaming

Industry bodies for the online skill gaming sector in India have voiced concerns regarding the impending revision of goods and service tax (GST) rates on the sector. Speaking on the matter, industry bodies E-Gaming Federation (EGF), All India Gaming Federation (AIGF) and Federation of Indian Fantasy Sports (FIFS) said that implementing a 28% GST rate could “annihilate” the sector.

In an upcoming two-day meet, the GST Council is tipped to consider a proposal to implement 28% GST on the gross gaming value (GGV) of a tournament. The latter includes participation fees that gamers pay to join a tournament or participate in online skill game matches, and a commission rate that gaming platforms charge on the fee paid by users to provide the service.

On May 18, Mint reported that a group of ministers advised the GST Council to include online gaming along with casinos and race courses to implement 28% tax on the sector. Industry stakeholders said at the time that it was important to differentiate between game of skill and game of chance – and treat each sector with distinction.

So far, the online skill gaming sector charges 18% GST on just the commission rate that the platforms charge, called gross gaming revenue (GGR). Therefore, industry stakeholders have already voiced concerns that such a revision would not just amount to a 10% increase in taxes that online skill gaming platforms might be liable to pay if the GST Council goes through with the proposal – but could actually be much more.

As part of a joint statement earlier today by EGF, AIGF and FIFS, Sameer Barde, chief executive of EGF, said that increasing the tax burden on online skill gaming platform operators in India would “not only be in dissonance with international best practices, but is also violative of the principles of GST.” He further added that the move would “annihilate this sunrise sector.”

Fellow stakeholders of the gaming industry are also in agreement to the industry bodies. On Monday, Amrit Kiran Singh, advisor to AIGF, told Mint that applying 28% GST on the GGV – instead of the present 18% GST on GGR – will “lead to an almost 900% increase in taxes, which will kill the emerging gaming industry.”

Anwar Shirpurwala, chief executive of FIFS, said in the joint statement that alongside killing legitimate operators in this sector, such a move can actually have a reverse impact – decreasing tax collection for the government, and boosting black market operators instead. Roland Landers, chief executive of AIGF, concurred with Barde and Shirpurwala, adding that the new proposed tax regime would “nip its potential in the bud.”