The online gaming industry will be okay with a 28% GST if the tax is levied on the commission/fee earned by the platforms and not the total pooled amount. Roland Landers, CEO of the All India Gaming Federation (AIGF), on Thursday, said if the government settles the valuation aspect of the GST in the industry’s favor, it will be okay with 28% GST.
“We can take care of a 55% higher tax outgo (due to 28% GST instead of 18%), but we can’t deal with an 1,100% increase in tax liability (if the government decides to tax on the pooled amount instead of the fee earned),” he said. The online gaming industry has been making a representation against the government bracketing online gaming with casino and horse racing.
The industry has argued that, unlike casino and horse racing, online gaming is a game of skill rather than game of chance, and therefore, it should be taxed at 18% instead of 28%. The industry has also opposed the tax authorities’ stand on GST being levied on the total pool (prize money pooled plus the platform commission) and not on gross gaming revenue (GGR). The matter is still pending with the GST Council, which has formed a Group of Ministers (GoM) to decide both the valuation and tax rate issue.
Meanwhile, the industry sources said that GST authorities have served RS 49,000 crore tax demand on seven online gaming companies including Gamescraft, Dream11, Games 24×7 and Head Digital Work (which operates online games by the name of A23).
These companies were served tax demand notice for allegedly indulging in betting and gambling, and accordingly the company is liable to pay a GST of 28% on the ‘face value’ of collections made.
The industry sources have said to serve RS 49,000 crore tax demand notice on a fledging sector that generates revenue of only RS 16,000 crore is unthinkable.