Regardless of whether an online game is a skill game or a game of chance, the panel of state finance ministers is expected to suggest a standard Goods and Services Tax (GST) rate of 28 percent, according to sources.

The possibility of suggesting a revised formula for calculating the amount on which the GST would be levied is also in consideration. The report from the Group of Ministers (GOM) is in its final stages and will soon be submitted to the GST Council soon for consideration.

A 28% GST was already proposed earlier by the GOM, chaired by Meghalaya Chief Minister Conrad Sangma, on the full value of the consideration, which includes the entry fee that is paid by the player while taking part in any game of skill or chance.

The council then advised GoM to take some time and reconsider the tax rate in their report. GoM then heard the Attorney General’s opinions and spoke with various industry stakeholders in the online gaming sector.

After many considerations and press on different definitions between the game of skill and the game of chance, the GoM ultimately decided to tax them as demerit products subject to a 28% GST.

Online gaming is bad, and that message must be made very clear. However, considerable leniency in the appraisal techniques might be offered as the reports from June earlier this year suggest that the GST will be levied on the total sum of money the participant has received.

For any and all types of online games, adding 28% GST to the total amount a player invests will limit the prize money available for distribution and discourage players from using reputable tax-deducting sites.

Online gamers may also be encouraged to use illegal sites that do not withhold taxes as a result, according to industry analysts.

According to KPMG research, the popularity of online gaming in India increased amidst the vivid lockdown, and the online gaming industry will increase from Rs 13,600 crore in 2021 to Rs 29,000 crore by 2024–2025.