The Goods & Services Tax (GST) council has decided that the GST rates on online games will remain unchanged at 28%, Finance Minister Nirmala Sitharaman said in a press briefing. She further also said that the 28% GST will be levied on full face value, and that a framework for overseas online gaming platforms is also in the works.
“The council recommended that valuation of supply on online gaming & actionable claims in casinos may be done based on the amount paid or payable or payable to or deposited with the supplier by/or on behalf of the player, excluding the amount entered into the games, bets out of winnings of previous games & not on the total value of each bet placed…,” she said.
The council may review the taxation structure on online games after six to eight months.
“It (28% GST on online gaming & casinos) is expected to be implemented from 1st October… It is also decided that this decision will be reviewed after six months after it is implemented. When I say six months it does not mean starting from today, it begins after when it is implemented,” she added.
The move to impose 28% GST on online real-money games has drawn a huge backlash from the startups operating in the space.
As many as 30 investors, including Peak XV Partners, Kalaari Capital, Tiger Global, and Alpha Wave, earlier this month wrote to the Indian Prime Minister Narendra Modi seeking a review of the decision to impose 28% GST on ‘online skill games’.
Calling for an “urgent attention”, investors in the letter said, “If full value of bets is understood in a manner where GST is levied on every contest played every time with fully taxed winnings, the GST burden will increase by 1,100% and on account of taxation of redeployed player winnings, the same money will get taxed repeatedly resulting in a scenario where over 50-70% of every rupee will go towards GST…”
Investors claimed the move will make the online real-money skill gaming business model unviable, lead to the writing off of investments made and hurt investor confidence.
