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The government’s high tax rate on goods and services (GST) in online games is causing the industry to worry about future growth plans. Industry experts and executives say it could impede the growth of online gaming firms and force fictional sports factories to lower the prize pool they offer, which could cause their major users to leave the platforms in search of bigger games. The GST Council will meet on June 28 to decide which slab to use.
In dream stadiums, players pay a fee to participate in competitions. These funds make up the total prize money for the competition, and the forum considers the decline to be a service delivery commission. Currently, 18% GST is charged this amount, called gross gaming revenue (GGR). However, the firms are concerned that the government will charge GST 28% of the total gaming revenue (GGV), which is the total amount invested by users. “Applying the GST to GGV will result in a tax increase of about 900%, which will kill the emerging gambling industry,” said Amrit Kiran Singh, an adviser to the All India Gaming Federation (AIGF).
The firms will eventually be forced to hand over the responsibility to the players, said an industry expert who did not want to be named. They will do this by reducing the total number of prizes, which will reduce the investment of players in their stadiums.
“Not only will that decision (to charge GST a full pool instead of GGR) be a disaster for the industry, and it is against the right tax code and GST rules,” said Dinker Vashisht, vice president, corporations and corporations. control news, Games24x7. Only lottery, betting, and gambling can be termed ‘active applications’ under the GST Act, Vashisht said. Fixed claims are claims made by debtors on any type of debt other than a debt received by a fixed real estate mortgage. . For example, in a real money game, the money deposited by players to build a prize pool later distributed among the winners is a claim that can be processed.
“The only fee charged by the operators of the skill games includes the amount of provision,” Vashisht said.
Experts also fear that the reduction in the number of prizes will take more players to overseas betting platforms that offer fun games, online rummy, and poker. “These stadiums are not regulated. They found holes in the system. Some of them even use money agents to deposit money in third-party wallets, ”says the aforementioned expert.
Singh warned that it would force Indian gaming companies to relocate overseas and take jobs and income abroad.
The recommendations made to the GST Council by the Ministerial Team (GoM) earlier this month are still unclear to the industry, said Jay Sayta, a lawyer and sports and sports advisor. He said it was unclear whether the new GST rules would only apply to real estate games or to eSports firms that do not generate real money sales.
Some participants also claim that using 28% of GST for online games as a whole is an effort for club skills and gambling, which falls under the GST top brackets. The decisions of the Supreme Court of India assume that skill games such as rummy will be considered legal and will not equate gambling.
The gaming industry has emphasized that many of the games they offer, including rummy, ludo, or poker, are skill games. Court decisions on some of these games also exist in India. Indian gaming companies are looking at the next level of growth and aim to reach China and the US, Singh said. “It simply came to our notice then. What is needed is a policy environment that is supportive and predictable and that will encourage people to stay and invest in the Indian market, ”he said.