As repetitive taxation fears arise, gaming firms wait for clarity

Industry executives said that repetitive taxation could lead to a 50-60 per cent indirect tax burden on gamers

Online gaming companies are concerned that potential repetitive taxes could act as a death knell for the industry, as it would make online gaming prohibitively expensive for consumers, according to a report in The Economic Times (ET). The firms are currently waiting for detailed notification from the law committee of the goods and services tax (GST) Council, which has announced a 28 per cent GST on the industry.

Industry executives were quoted as saying by ET that this could lead to a 50-60 per cent indirect tax burden on gamers as mostly they use their winning money to play another game, which would be taxed again, and so on.

Roland Landers, CEO of All India Gaming Federation said that levying GST on face value at each game will limit the engagement of the user with the platform. The move will make the cost per game-high and may cause unsuspecting users to move towards illegal offshore gambling websites.

Landers added that repetitive taxation could make the business of Indian online gaming firms unviable and lead to losses for investors.

Also Read: Explained: Will 28% GST kill real-money online gaming industry in India?

Gaming firms have raised their concerns with government officials. A senior finance ministry official was quoted as saying that some of the industry representatives told officials that the move will make taxation for online gaming higher than casinos. Officials were aware of the concerns of the industry and will try to keep the process simple.

Last week, the GST Council said that a 28 per cent GST will be levied on the turnover of online gaming firms, casinos, and horse racing companies.

In the case of online gaming firms, every time a user enters a contest, the entry fee will add to the company’s turnover but in casinos, the tax will be on the entry ticket irrespective of how much users spend. An industry executive stated that repetitive taxation goes against the principle of GST, which is supposed to be a simplified indirect tax regime.

Also Read: Will go back to GST Council to reconsider tax on online gaming: MoS IT

 There are an estimated 400 million users of online gaming in India at present.