Government official: No relief expected as GST revenue from online gaming surges five times

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Online gaming companies are facing big money problems. They’re getting surprise tax bills from the past, and they’re worried about the new Goods and Services Tax (GST) coming their way. Since September 2022, prominent players in the sector, including Gameskraft and Delta Corp, have been issued notices demanding a total of Rs. 1.12 lakh crore, as per calculations by the GST department.

According to a report by Moneycontrol, the GST Council, in its upcoming meeting planned for June, is unlikely to provide any rest to the troubled industry. A senior government official, aware of the matter, disclosed that the council is positioned to maintain the existing 28 percent GST rate on the face value of online gaming bets, a decision that could negatively impact companies already facing financial challenges.

Industry stakeholders have been advocating for a revision, urging the council to consider calculating the GST based on the gross gaming revenue (GGR) instead of the face value of bets. The review of the 28% Goods and Services Tax (GST) on online gaming has been deferred until after the conclusion of the general elections, as informed by an official familiar with the situation, mentioned in a post on X by NDTV Profit

“The GST Council meeting will happen in June-end, after the new government comes in. It will review online gaming revenue from October 1 (2023) onwards,” the official said. “The Council had decided 28 percent on the face value, and this is likely to continue as the GST revenue of the government from online gaming has increased 5-6 times in the last six months.”

GGR, the disparity between the total amount placed bet and the amount won, presents a more equitable approach to taxation, argue industry representatives. The issue will be directly brought before the Council for review.

Highlighting the increase in GST revenue from online gaming, the official revealed, “Earlier the GST from online gaming was at Rs. 200 crore per month, approximately. The figure has gone up quite substantially since October 1, 2023, to Rs. 1,100 crore per month.”

But, with all the financial turbulence, the online gaming industry has to deal with a harsh truth. With the GST Council signaling a reluctance to reconsider the existing charge, companies may need to explore alternative revenue generation ways. As the industry prepares for the upcoming GST Council meeting, attention remains on the fate of online gaming in India.