The online gaming industry in India has breathed a sigh of relief as the GST Council has claThe online gaming industry in India has breathed a sigh of relief as the GST Council has clarified that there will be no repeat taxation on gamers who use their winnings to play more games. However, the council has also decided to impose a 28% tax on the full face value of the deposits made by gamers, which could hurt the growth and innovation of the sector.
The GST Council, which met on Wednesday, said that the tax will be applicable on the "amount paid or payable to or deposited with the supplier (of services), by or on behalf of the player (excluding the amount entered into games/bets out of winnings of previous games/bets) and not on the total value of each bet placed". This ruling has resolved the issue of repetitive taxation, which was a major concern for the online gaming industry.
However, the council also said that 28% GST would be levied on the full face value and not the gross gaming revenue (GGR) or the platform fee. This means that the tax burden on online gaming platforms and players will increase significantly, as they will have to pay tax on the entire amount deposited, regardless of how much they actually play or win.
The online gaming industry, which includes fantasy sports, skill-based games, and e-sports, has expressed its appreciation for the government's decision to address the issue of repeat taxation, but has also voiced its disappointment over the high tax rate on deposits. The Federation of Indian Fantasy Sports (FIFS) and E-Gaming Federation (EGF), which represent 50 online gaming companies, said in a joint statement that "the new tax framework, while clarifying and resolving uncertainty, will lead to a very burdensome 350% increase in GST and set the Indian online gaming industry back several years".
The industry has also argued that online gaming is not a homogeneous category and has diverse and distinct business models that need to be evaluated more carefully. The industry has also requested the government to reconsider its decision and adopt a more rational and progressive tax policy that will foster the growth and innovation of the sector .
The online gaming industry in India is one of the fastest-growing segments in the digital entertainment space, with an estimated user base of over 400 million and a revenue potential of over $2 billion by 2023. The industry has also created thousands of jobs and contributed to the development of sports and technology in the country. However, the industry faces many challenges, such as regulatory uncertainty, legal disputes, social stigma, and now a high tax burden. The industry hopes that the government will recognize its potential and support its development in a fair and transparent manner.
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