GST Councilâ€™s latest decision on 28% GST disappoints gaming industry

The 51st GST Council meeting was held yesterday (August 2, 2023) on the 28% GST levied on the online gaming industry. Following massive hue and cry from the industry on the high taxation, the Council met yesterday to take a decision on the rollback of the 28% GST.

Following the meeting, while the Council decided not to roll back the 28% GST, there was some relief for the industry as the 28% GST will be levied at face value of entry level bets placed in gaming platforms and casinos. It may be noted here that Delhi, Goa and Sikkim have opposed this.

Moreover, the Government is planning to bring in amendments to the Central GST law in the ongoing monsoon session of Parliament. The amended provisions in the GST law will be effective from October 1.

It is learnt that a review of this decision will be held after six months of the implementation.

Reacting to the GST Council’s decision, in a joint statement issued, E-Gaming Federation (EGF) and FIFS stated, “FIFS and EGF, which represent 50 Indian online gaming companies, appreciate the Government addressing the industry’s concerns on the issue of repeat taxation. 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. However, it will allow gaming companies a fighting chance to innovate and rebuild the foundation of gaming in India.”

Expressing its disappointment, the management of Kick Rummy in a statement issued said, “This is a major setback for the overall gaming industry as players will be less willing to pay higher taxes on their wagering. So, most players will switch to offshore operators, where they can avoid the overall taxation (GST & TDS). As an Indian operator, this will make it more difficult to compete with one another and stifle the growth of the industry (which has been rising exponentially over the past few years). It will also be very difficult to compete with offshore operators, who are not subject to GST.”

According to Kick Rummy, the other effects that will be seen include:

Job losses in the online gaming industry.
Deter FDI in the online gaming industry.
Damage the reputation of India as a gaming destination.D
Detrimental to the overall Indian start-up ecosystem.

At the same time Kick Rummy added, “However, the Government’s willingness to review the decision after six months gives everyone some hope for the future of the online gaming industry.”