The Internet and Mobile Association of India (IAMAI) on Monday called on the GST Council to continue to maintain the tax on online gaming at 18 per cent, and any further increase would hamper the overall well-being of the industry.
Various stakeholders are discussing raising the tax rate on goods to 28 percent for the online gaming industry.
There is no clarity as to whether this will only apply to real money games or casual games, given that the former is a sub-segment of online gaming.
“Any such increase in the tax rate on goods and commodities is likely to make businesses in the sector unviable, leading to a complete cessation of work, which in turn will lead to the loss of many jobs,” – said in a statement the industry body.
It will also lead to “a loss of investor confidence that will deplete the online gaming industry in India, which is currently seeing rapid and exponential growth of 35 per cent CAGR,” IAMAI added.
According to a recent report by BCG and Sequoia, the Indian online gaming industry is expected to reach $ 5 billion by 2025.
The industrial body said that increasing the tax rate would erode the tax base, on the one hand, and stimulate the emergence of gray markets, on the other.
“It is also important to consider only Gross Gaming Revenue (GGR) or platform fee as 18 percent tax on goods and to consider the ‘prize fund’ as a claim under Clause 6 of CGST Report Act III, 2017,” – is added.
Many industry experts oppose online gaming industry clubs with a 28 percent tax on goods and services along with racing, gambling and betting.
Earlier this month, the Group of Ministers (GoM) on casinos, racing courses and online gaming discussed various aspects, including possible tax rates on goods and commodities.
The GoM concert and Meghalaya Chief Minister Konrad K. Sangma said the meeting also discussed whether there are common or different tax rates on goods and goods on online games.
According to Sangma, the annual turnover of online games alone is about 30,000 crore rupees, and the annual increase is 25 to 30 percent.
Several more technical aspects needed to be discussed before the next government meeting this month.
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