India’s Goods and Services Tax Council decided to impose a levy of 28% on online gaming in a blow to the industry that has boomed in recent years.
(Bloomberg) — India’s Goods and Services Tax Council decided to impose a levy of 28% on online gaming in a blow to the industry that has boomed in recent years.
Taxes will be imposed at entry points on full face value for online gaming, casino and horse racing, Finance Minister Nirmala Sitharaman said at a briefing in New Delhi Tuesday, adding the GST law would be amended to include online gaming.
This paves way for a uniform rate on game of skill as well as game of chance, as opposed to the 18% tax currently levied on online skill-based games.
“Our agenda is not to end the industry but that does not mean we will give it more importance than essential goods,” Sitharaman said. “We are purely looking at what is being taxed.”
Online gaming companies have long fought to be considered distinct from betting and gambling businesses — sectors with a negative social image and more onerous tax provisions. The decision is seen to hurt the $1.6 billion industry that has boomed in India, particularly since the Covid-19 pandemic forced many people to stay at home.
“The implementation of a 28% tax rate will bring significant challenges to the gaming industry,” said Aaditya Shah, chief operating officer of online gaming platform IndiaPlays. “This higher tax burden will impact companies’ cash flows, limiting their ability to invest in innovation, research, and business expansion.”
Gaming companies, including online gaming companies in India as well as overseas, have evaded goods and services tax worth 229 billion rupees ($2.8 billion) from April 2019 to November 2022, the Finance Ministry told Parliament in December.
Here’s more from the GST meet:
- The panel said there will be 22% cess for all utility vehicles with unladen ground clearance of 170 mm, 4-meter length and over 1500 cc engine capacity
- The council clarified that food and beverage served in cinema halls will be taxed at 5%
- Satellite launch services by private organization will be exempted from GST
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