India’s online gaming sector, which has been growing at a rapid pace in the last five years, is staring at a bleak future after the GST (Goods and Services Tax) Council decided to impose a 28% tax on the entire value of gaming transactions. The move, which has sent the shares of gaming platforms and casinos tumbling, will mean that players will have to pay more than half of their winnings in taxes, including GST, platform fees and income taxes. The industry, which comprises of over 900 gaming start-ups, says the tax hike is “unconstitutional, irrational and egregious” and will kill the multibillion-dollar industry with a single stroke.

It also fears that it will drive away investors and customers to illegal and offshore operators. The GST council, which is made up of federal and state finance ministers, justified the decision by saying that online gaming is akin to gambling and should not be encouraged over essential goods and services. But the industry argues that online gaming is a skill-based activity that is legal in most states and has the potential to create jobs and cater to the global market. It also says that the tax hike goes against the prime minister’s vision of a $1tn digital economy.

The industry plans to challenge the decision legally if it is enacted into law by the federal and state governments. But India’s revenue secretary said that the decision was “unanimous” and would not be reviewed or rolled back. The tax hike has also sparked a moral debate over whether online gaming is a harmful addiction or a harmless entertainment. Some former gaming addicts and activists have welcomed the move and called for stricter measures or even a total ban on online gaming.

Source: BBC India

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