The eSports Players Welfare Association (EPWA) shared a report on the rapidly growing gaming industry in the backdrop of the 50th GST Council meeting that is underway and deliberating on the tax rate for the online gaming sector. The association stated that esports should not be taxed in the same manner as real money gaming (RMG).

According to a survey by EPWA, if the GST rate is increased, 61 out of 100 gamers will discontinue playing online games. Furthermore, the increased tax rate on contest entry amount (CEA) will only add to financial burden of the gaming companies.

Like many other reports by law firms and think-tanks, the EPWA report also suggested that GST should be charged on the gross gaming revenue (GGR) and not on CEA.

In a statement to Livemint, EPWA director and tech policy lawyer Shivani Jha said, “We hope that the council of ministers will take equitable steps to ensure an increased GST doesn’t discourage players from playing altogether. Gamers must not be taxed the same way as Gamblers.”

The report also urged to take into account the distinction between games of skill and games of chance, citing the Karnataka High Court ruling in the Gameskraft matter where the former quashed the Rs 21,000 crore GST notice. The court contended that the games offered by the gaming company were games of skill and so should not attract 28% GST rate on full entry fee.

Zerah Gonsalves, CEO of League of Extraordinary Gamers, also commented on the matter saying, “Online gaming is a profession for some of us, an increased GST is a deterrent. Our investments in buying equipment also don’t give us any input credit, and now the proposed regime seems harsh.”

EPWA, in its report, reveals that the Indian gaming market is growing at a rate of 30% annually and has accounted for 19.2% of worldwide game downloads till May 2022. In 2021 alone, the gaming market clocked around 39 crore online gamers and the industry is growing at a CAGR of 22% approximately.