Online Gaming Industry Appeals for GST Review
Industry's Plea for Consideration
The online gaming sector in India is pressing its case for a review of the Goods and Services Tax (GST) imposed on its operations. Roland Landers, the head of the gaming federation, underscores the importance of balancing government revenue and industry sustainability. He remains optimistic about the forthcoming GST Council meeting, anticipated in June, where the matter will likely be revisited.
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1- Compliance and Concerns
Landers assures that the industry is fully compliant with the revised GST regulations implemented since October 1 last year. However, the transition to a 28% tax on deposits, up from the previous 18% on revenues, has caused significant concern within the sector. Industry stakeholders argue that this sharp increase, amounting to a 450% rise in effective GST, poses challenges that many firms are presently absorbing.
2- Impact on Revenue and Contributions
Despite the industry's adjustment efforts, reports indicate a substantial surge in monthly GST collections from online gaming, now ranging between ₹1000-₹1200 crore compared to the previous ₹200 crore range. This translates to a notable 1-2% contribution to the overall GST collections for the government.
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3- Request for Moderation
The industry is earnestly appealing for a moderation in the 28% GST rate, seeking a solution that ensures increased tax revenue for the exchequer without jeopardizing the industry's viability and growth prospects.
4- Legal Ambiguities Await Resolution
Adding to the industry's concerns is the ongoing legal ambiguity surrounding the classification of online gaming. The GamesKraft case, particularly, has stirred debates over the retrospective application of GST, with the Centre labeling online gaming involving money as gambling rather than a game of skill. While the Karnataka High Court dismissed the Centre's ₹21,000 crore tax demand, the matter is now before the Supreme Court, awaiting final adjudication alongside other related petitions.
Considering these developments, the online gaming industry remains hopeful for a favourable outcome in both regulatory and legal spheres, emphasizing the imperative of striking a balance between fiscal objectives and industry sustainability.
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