The 50th Goods and Services Tax (GST) Council meeting on Tuesday decided to collect 28% GST on full face value on online gaming. Finance minister Nirmala Sitharaman said in a press conference that online gaming, horse racing, and casinos, all will be taxed at 28%. There will be some amendments to the GST law to include online gaming, she added.
In an exclusive conversation with CNN-News18, entrepreneur Ashneer Grover called the move “extremely unfortunate”.
“The gaming regulations have evolved,” he said. “The industry has gone through a fire test in the Supreme Court to prove itself that it’s not gambling; it’s a game of skill.”
The industry in any case is paying 28% tax already, said Grover, who recently launched the fantasy sports league CrickPe. “By imposing 28% GST, you have killed the industry,” he said.
Increasing the GST rate is not going to result in higher tax collection, Grover said.
“If this is not taken back, the next step is the death of this whole industry,” the entrepreneur said.
Sitharaman in her press conference had said that the online gaming industry’s impact and revenue generation had been discussed. “It is not in our agenda to destroy the industry at all," she added.
The finance minister cited the examples of Sikkim and Goa where casinos are a big part of the tourist attraction and said there was a detailed discussion on how to make sure that the taxation won’t affect the tourism of these states or such industries.
“It is not our intention to destroy any of these industries whether it is casinos, horse racing, or online gaming. But all of these have become complicated. It is impossible to pierce the veil which brings opacity on how it is actually operated. So there should be a simplified system,” she said.
Till now, 18% GST was applicable only on the gaming fee which was paid by the companies, but the 28% tax is now applicable to the entire pool of money. This will impact the winnings and thus the user journey, said industry insiders. Already, there is a 30% TDS applicable on the winnings.
