28% GST on real money gaming
The decision to increase the tax rate on online gaming demonstrates that the GST regime still exhibits stratification, deviating from the original aim of uniformity.
On 11 July, the Goods and Service Tax Council recommended that the “full value of bets” in online gaming be taxed at 28 per cent. The Council’s decision impacts the real money gaming industry — the largest segment of the online gaming ecosystem — which previously came under the 18 per cent tax bracket, applicable only to their service fee. Stocks of listed gaming companies plummeted by 20 to 24 per cent on average.
28% GST on real money gaming
The GST Council’s decision will increase the tax liability on real money gaming ten to twenty times. Consumers will have to bear the commensurate increase in gaming costs. They may also shift to offshore websites that are outside the regulatory perimeter. Such an outcome will dent the Union government’s recent efforts to provide users with a safety net through the recent online gaming rules under the Information Technology Act. These rules aim to address financial and behavioural risks associated with real money games.
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