28% GST on online gaming: Government unlikely to review decision

A review or a rollback of the decision to impose 28% goods and services tax (GST) on the full value on online gaming is unlikely even as industry is hoping to get some respite.

Official sources indicated that any review of the decision by the GST Council is not on the cards. “There is no plan for a review. The decision was taken unanimously by the GST Council after much thought and deliberation,” said a person familiar with the issue.

Notification giving effect to this decision is likely after the amendments to the GST Act in the Monsoon Session of Parliament.

Online gaming firms and players are understood to have written to the finance ministry to reconsider the 28% GST, expressing concerns that it would adversely impact the growth of the sector, lead to job losses and increase costs for players.

“This is an extremely unfortunate decision as charging a 28% tax on full face value will lead to a nearly 1,000% increase in taxation and prove catastrophic for the industry. A tax burden where taxes exceed revenues will not only make the online gaming industry unviable but also boost black-market operators at the expense of legitimate tax-paying players, further undermining the industry's image and capacity to survive,” Malay Kumar Shukla, Secretary of the E-Gaming Federation, had said after the GST Council’s decision.

This is in addition to the loss of employment opportunities and the huge impact on marquee investors who are heavily invested in this sunrise sector, he had further said.

On Monday, the Confederation of All India Traders (CAIT) also called on Prime Minister Narendra Modi to intervene, re-evaluate and revoke the decision of the GST Council to levy GST on the full face value for online gaming and clubbing it with gambling activities.

“According to CAIT, this will also lead gaming users to illegal offshore website, thereby making the internet less safe for the digital nagriks and is an aberration to the efforts being made by the Central Government to regulate and promote safe online gaming,” it said in a statement.