Govt Defers GST Hike Decision On Online Gaming; Seeks Report From GoM

The GST council, currently active and seated in Chandigarh, was deliberating whether there should be a 28 percent tax on online gaming. The decision is deferred for now and a report is sought from a group of ministers in 15 days. The group of ministers (GoM), headed by Meghalaya Chief Minister Conrad Sangma, is set up by the Ministry of Finance to look into matters related to the GST blanket, which is believed to fully cover online gaming, casinos and horse racing.

Currently the GST that is tax levied on the online games involving betting and gambling is 28 percent, and on games which do not involve betting and gambling is 18 percent. The council is planning a flat 28 percent rate for all online games whether its game of chance or skill. The games which are enjoying only 18 percent GST will be the most impacted by the hike in rate. Also, as per the recommendations this 28 percent will be definitely on full face value.

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As per reports, GST will be levied on the entry fee or the initial betting amount. The decision will be a game changer for online gaming and casinos. Companies which invest in such a sunrise sector will face a crunch and may start moving out of this industry. The online gaming industry is making a strong plea against stiff GST rates to protect this $1.8 billion sector.

The Online gaming landscape has seen a growth of almost 40 percent in 2019-20. The most substantial hike in the number of players came during the COVID-19 pandemic when the youth was confined to homes and games became one of the primary sources of entertainment. As per statistics, an average Indian youth is spending Rs 230 a month on online games.