Exclusive: Industry body FIFS seeks separate GST SAC code for online gaming

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Fantasy gaming industry body FIFS earlier this week has written to the Sanjay Malhotra, Revenue Secretary seeking immediate implementation of the new tax regime of 28% on full face value. It is worth noting that the union government this Friday has notified 1st October as the effective date for amendments under the CGST Act.

The letter by Director General of FIFS also sought a separate SAC code for online gaming distinct from betting and gambling or lotteries. SAC stands for Servicing Accounting Code and is used to classify services under tax laws.

FIFS said a separate SAC code will ensure business continuity and will prevent legitimate online gaming platforms from prosecution and harassment under various state-based gambling laws and regulations, which will lead to multiplicity of litigations and disputes and unnecessary harassment for the legitimate operators. Harsh Jain, co-founder, Dream11 is the President of FIFS.

The industry body said if legitimate online gaming does not get a separate classification distinct from betting and gambling or betting, then all payments done by consumers through RBI approved payment gateways will get prohibited since the RBI does not permit any regulated payment gateways to enable payments which relate to gambling and betting activities.

Additionally, the letter stated that legitimate online gaming operators shall also face issues with advertisers and other third parties who may consider them as gambling and betting companies and not enter into commercial contracts for services.

Incidentally, e-gaming companies along with another industry association AIGF after the Friday’s notification, have flagged that since many states are yet to pass amendments in their respective State GST (SGST) laws, the notification by the union government in CGST and IGST laws will create confusion.

In a letter to Revenue Secretary Sanjay Malhotra, AIGF sought to know that with around 15 states yet to make changes to their respective State GST laws, what would be GST treatment that ought to be adopted by online gaming companies registered in those states in relation to deposits received from players of those states.