As the online gaming industry awaits a review of the 28% goods and services tax (GST) on the sector, the GST Council is unlikely to roll back the levy. According to sources, the government believes that the tax has been accepted by industry players and that tax collections are performing well.
However, the issue of past GST payments remains a concern for the industry and may be reviewed. “It is unlikely that the 28% GST will be withdrawn. The industry and customers seem to have settled into it, as indicated by the continued growth in tax collections from online gaming,” said a source familiar with the matter.
Nevertheless, the issue of GST notices for past payments is likely to be reconsidered, as many firms are worried about these demands. “Many writ petitions have been filed on the issue, and the Supreme Court will now hear them. Companies are awaiting the ruling,” said another source.
Meanwhile, companies have highlighted that for notices covering previous years, the money was already paid to the players, making it difficult for them to comply with the demands.
The GST Council will address these issues after the General Elections and the formation of the next Union government. Sources indicate that the Council meeting may occur in late June or after the Union Budget in late July.
The Council had promised to review the 28% GST on online gaming, casinos, and horse racing after six months. The new tax regime was implemented for these sectors on October 1, and many companies were concerned about its impact on players who might avoid gaming due to the high tax burden.
Industry players and experts hope for an alternative to the 28% tax to allow the industry to expand further. “Measures such as temporarily locking out players who have spent long hours or large sums on online gaming in one day can be considered,” said Amrit Kiran Singh, President of the Skill Online Games Institute (SOGI), headquartered in Gurugram.
“India will need at least two, if not three or four, growth engines to propel us into the top economies in terms of per capita income,” he added, noting that IT has been a successful sector for over three decades.
The online gaming industry, due to its size and the natural aptitude of Indians in IT-related fields, can significantly boost India’s economic standing, Singh noted, calling for a reconsideration of the 28% GST.
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