GST Council meet on Aug 2 to discuss 28% tax on online gaming

Amid massive uproar from the online gaming industry against the imposition of 28% Goods and Services Tax (GST) on online gaming earlier this month, the GST Council will meet on August 2.

The meeting comes in the backdrop of domestic as well as foreign investors in the gaming sector giving a detailed presentation to PM Narendra Modi urging the government to roll back the high tax imposed on the sector and the domestic companies writing to the finance ministry on the ill impact of the move.

In its meeting on July 11, the Council recommended online gaming to be taxed at 28% on the full face value, along with horse racing and casinos. Tax charge on the 'full face value' enhances the GST outgo by over 10 times, the gaming industry says. Earlier, only the platform fee was taxed at 18%.

“All three namely casino, horse racing, and online gaming to be taxed at the uniform rate of 28%. Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of horse racing, and on the full value of the bets placed in case of the online gaming,” said the finance ministry said.

Meanwhile, gaming industry investors apprised PM Modi of the “unintended consequences” of equating the constitutionally protected legitimate online skill gaming industry with gambling, betting, and other "games of chances".

"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 billion capital invested in this sector," they said.

The move, they claimed, will adversely impact prospective investments to the tune of at least $4 billion in the next 3-4 years and hence the growth of the gaming sector in India.