As the online gaming industry eagerly awaits a review of the 28% Goods and Services Tax (GST) imposed on the sector, the GST Council appears unlikely to roll back the levy. Government sources indicate that the tax has been broadly accepted by industry players, with consistent growth in tax collections from the sector.
The industry, however, remains concerned about the payment of GST notices for past dues, an issue that may be reconsidered. "It is unlikely that the 28% GST would be withdrawn. The industry and customers seem to have settled into it, as is being indicated by the continued growth in tax collections from online gaming," said a person familiar with the development.
The issue of past GST notices is particularly pressing, as numerous firms face demands for previous years' payments. "Many writ petitions have been filed on the issue and will now be heard by the Supreme Court. The ruling is being awaited by companies," noted a second source.
Firms argue that they had already disbursed the money to players, complicating their ability to meet these past demands. This matter, alongside the broader tax review, will be addressed by the GST Council following the General Elections and the formation of the next Union government. The Council meeting is anticipated either in late June or post the Union Budget in late July.
Initially, the Council had promised a review of the 28% GST on online gaming, casinos, and horse racing after a six-month period. With the new tax regime implemented from October 1, concerns were raised about its impact on player participation due to the significant tax burden.
Industry leaders and experts are advocating for a reduction in the high 28% tax rate to foster further growth in the sector. "Measures such as a temporary lock out for players who have spent long hours or a lot of money on online gaming in one day can be looked into," suggested Amrit Kiran Singh, President of the Skill Online Games Institute (SOGI).
"India will need at least two if not three or four growth engines to power us into the top economies of the world in terms of per capita income," Singh stated. He emphasized that while IT has been a consistent performer for over three decades, the online gaming industry has the potential to rapidly advance India's economic standing due to its size and the country's natural aptitude in IT-related fields.
As the industry awaits the GST Council's decision, many remain hopeful that a more favorable tax structure will be adopted, enabling the online gaming sector to thrive and contribute significantly to India's economic growth.
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