GST should be on revenue, not on entry fee

New Delhi: Online skill-based gaming industry is fine with the government raising GST on online gaming from 18 per cent to 28 per cent but it should be levied only on gross gaming revenue (GGR) and not on contest entry amount as could hit the $2.2-billion sector, say industry players.

There are reports that upcoming GST Council may consider imposing a 28 per cent Goods and Services Tax (GST) on the total amount rather than the current practice of 18 per cent on GGR. GGR is the fee charged by an online skill gaming platform as service charges to facilitate the participation of players in a game on their platform while Contest Entry Amount (CEA) is the entire amount deposited by the player to enter a contest on the platform.

"As an industry, we are united on our ask that GST continues to be levied on the gross gaming revenue and not on the contest entry amount. The increase from 18 per cent to 28 per cent GST on the gross gaming revenue already increases tax revenue for the exchequer by around 55 per cent,"said TrivikramanThampy, co-CEO, Games24x7.

While the industry will absorb this, levying the tax on the contest entry amount, will make the industry completely unviable, he said, adding, the increased tax burden will have to be passed on to the consumers, leading to a ripple effect in terms of legitimate businesses losing customer base as players move to grey market and offshore gaming platforms who have no tax liabilities in India. This is a lose-lose scenario for the government, the consumers, the legitimate businesses in the sector as well as any existing or potential investments that the sector attracts, he added.

The GST Council is expected to meet on December 17, 2022, in a virtual format and the panel headed by the Finance Minister may take up agenda related to Casino, Race Course and Online Gaming industry. It is to be noted that the 47th GST Council meeting held in June had directed that the Group of Ministers on Casino, Race Course and Online Gaming re-examine the issues in its terms of reference based on further inputs from States and submit its report within a short duration. Another player in the space Digital Works Pvt Ltd said the industry's ask for GST on gross gaming revenue, rather than entry fees, is a crucial step towards ensuring the growth and development of this sunrise sector in India.