The government is still in the nascent stages of creating a predictable, sustainable, permissible online gaming framework, the union minister said.
The real-money gaming segment accounted for 77 percent of India’s gaming sector revenues in 2022 which stood at Rs 13,500 crore, as per a recent FICCI-EY report
In a move that could come as a breather for the real-money gaming industry, Rajeev Chandrasekhar, the Union Minister of State for Electronics and Information Technology, has said that the ministry will go back to the GST council requesting them to consider the new regulatory framework after it is put in place in the country.
In April, MeitY notified new gaming-related amendments to the IT Act 2021, that will allow multiple self-regulatory organisations (SROs) to determine whether a real-money game, where the transfer of money is involved, is permitted to operate in India or not.
His comments comes after the GST Council decided to impose the top GST slab of 28 percent on the full value of the money paid by users to play skill-based games, in a uniform manner with no distinction made between game of skill and chance. Gaming platforms currently pay an 18 percent GST on platform fees.
Speaking at CNN-News18 Town Hall on July 17, the minister said that they are still in the “nascent stages” of creating a “predictable, sustainable, permissible” online gaming framework.
This decision, which came after years of deliberation, had shocked the country’s burgeoning real-money gaming industry. Several industry executives and associations have warned that this move will “wipe out the entire industry and lead to job losses”
A group of around 130 real-money gaming startup founders, CEOs and industry associations had signed an open letter to the government, requesting them to reconsider the recent decision to levy 28 percent on the full value of pool deposit, Moneycontrol reported on July 15. They had also sought the government an opportunity to discuss this representation.
Read: 28% GST levy will upend the economics of real-money gaming sector, says Nazara’s Nitish Mittersain
Among the companies that have signed the letter include prominent ones such as Gameskraft, Nazara Technologies, Mobile Premier League, WinZO, Adda52, Head Digital Works (A23), CrickPe and industry associations All India Gaming Federation, E-Gaming Federation and Federation of Indian Fantasy Sports.
It’s worth noting that these tax rates do not apply to free-to-play and paid video games in the country, wherein the 18 percent GST rate is already included in the app sales on Google Play and Apple App Store.
During the town hall, the minister clarified that the GST Council is not the “Government of India. The GST Council is represented by all the state governments. It is truly a federal organization. State governments, finance ministers and the government of India have come together and created a GST framework,” he added.
He mentioned the council’s decision was a consequence of three years of work. “While we may quibble with what they have found, industry seems unhappy with it, we have to also recognize that the process of creating a regulatory framework for online gaming has only started in January 2023.”
“I hear the noise and I hear some people saying it is anti-constitutional but they are certainly wrong,” the minister said.
The union minister added that it is “better to slowly progress and evolve these frameworks that are sustainable… then create downstream mistakes.”
“The Prime Minister (Narendra Modi) is very clear that in the digital space, do everything from a perspective of the next decade. The laws, the rules all go through detailed deep consultation with the stakeholders. Online gaming rules went through almost three and a half months of consultations. What the government started with and what they ended with were totally different as a consequence of the consultations. So better to do it right than do it fast,” he said.
The real-money gaming segment accounted for 77 percent of India’s gaming sector revenues in 2022 which stood at Rs 13,500 crore, as per a recent FICCI-EY report. These revenues are set to grow to Rs 16,700 crore in 2023 and Rs 23,100 crore in 2025, it said.
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