The GST Council has agreed to impose a 28 per cent tax on online gaming, casinos and horse racing. The tax would be levied on the full face value.
The All India Gaming Federation (AIGF), which represents companies like Nazara, GamesKraft, Zupee and Winzo, said the decision by the council is unconstitutional, irrational, and egregious.
The decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities. This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefiting from this will be anti-national illegal offshore platforms.
Online gamers have urged the government and the GST Council to collect 18% GST on their market segment rather than the 28% that was suggested by the Group of Ministers.
And the implementation of a 28 per cent tax rate will bring significant challenges to the gaming industry. This higher tax burden will impact companies’ cash flows, limiting their ability to invest in innovation, research, and business expansion.
E-Gaming Federation -EGF claimed that online gaming is different from gambling, and the Supreme Court and various High Court decisions have reaffirmed the status of online skill-based games as legitimate business activity protected as a fundamental right under the Indian constitution.
The industry was quite optimistic with the new developments, which included changes to the IT rules and the implementation of TDS on net winnings,all this will be ineffective if the industry is not supported by a progressive GST regime.
