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    Online gaming industry pushes against hiking GST rates from 18% to 28%

    Online gaming industry pushes against hiking GST rates from 18% to 28%

    Online gaming industry pushes against hiking GST rates from 18% to 28%
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    By Timsy Jaipuria   IST (Published)

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    Pushing for a stable taxation regime, the online gaming industry has written to the Group of Ministers (GoM) nominated by the GST council on online gaming, casinos and race courses, saying that any hike in GST rate could dampen revenue and employment generation opportunities.

    The Group of Ministers (GoM) nominated by the GST council on online gaming, casinos and race courses is likely to meet mid-May to finalise their view, which is likely to hike GST rate from the existing 18 percent to 28 percent. Against this backdrop, the online gaming industry has approached the GoM to reconsider the decision.
    Pushing for a stable taxation regime, the online gaming industry has written to the GoM saying that any hike in GST rate could dampen revenue and employment generation opportunities. “The proposal to levy 28 percent GST on the entry fee plus a  115 percent surcharge instead of platform fee/Gross Gaming Revenue (GGR) will make the industry commercially unviable,” the industry said in a press release on Friday.
    The industry claims that it should not be clubbed with racing, gambling and betting.
    Reacting to the proposal, Gopal Jain, Senior Advocate, Supreme Court of India, said, “internationally, markets which started taxing the prize pool instead of GGR had to revert back to taxing only GGR noting non-compliance, revenue leakage and grey markets. The GoM should consider international tax structure on online gaming industry prevelant in countries such as USA, UK, Australia, Germany etc. Internationally, GST levy on GGR is between 15-20 percent. The Indian government should consider these facts before announcing any changes.”

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    Similarly, Rameesh Kailasam, Chief Executive Officer, IndiaTech.Org, too added, "It is necessary that games involving predominance of skill ideally be taxed at 18 percent on the platform fee. The GoM should ideally take a positive view and recommend continuance of the current practice of considering platform fee/GGR as value of supply. And most importantly, online skill-based gaming is not gambling or betting.”
    Expressing concerns on the current ambiguity, S Krishnan, an advocate practising sports law and taxation law, said, “A higher tax burden will make the industry unviable, and online gaming platforms have appealed to the government on numerous occasions to not treat skill-based online games same as gambling while sharing a case in point on how a different and rational tax treatment of online skill based games can help in eliminating non-compliance, leakage of revenue and grey markets.”
    Meghalaya Chief Minister Conrad K Sangma, also the convener of the GoM, had held a meeting group on May 2 after which, had stated that no formal decision has been taken by the GoM as yet but “the members have been able to move forward to a large extent on issues related to rates, valuation on which the rate should be applied and certain issues of online gaming were discussed in detail. Few more technical aspects need to be discussed, post which the final recommendations will be made and submitted to the council".
    The GoM was constituted by the GST Council to study the GST rates for casinos, race courses and online gaming. The terms of reference had stated that the GoM  will take into account the existing legal provisions and court orders on related matters.
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