As the Indian online gaming industry continues to grow, stakeholders are gearing up to address a challenge post-general elections: the burden of Goods and Services Tax (GST). With the current tax regime taxing online gaming at full face value, industry insiders argue that this approach is unsustainable, particularly for startups in the sector.

As reported by Money Control, a spokesperson representing the industry revealed that a collaborative effort is planned post-elections to engage with the new government, advocating for a shift in GST computation from face value to Gross Gaming Revenue (GGR). The proposal underscores the need for a tax structure that encourages growth and sustains the startup ecosystem within the sector.

“Maintaining a 28 percent GST on face value is untenable for the industry. It threatens to stifle competition and undermines the growth potential of startups,” the spokesperson emphasized.

Since the imposition of GST at full face value from October 1, 2023, online gaming revenue has witnessed an increase, rising from Rs. 200 crore to Rs. 1100 crore per month. However, industry insiders argue that this growth trajectory could be further amplified if GST were levied on GGR instead.

“Prior to October 1, 2023, the industry was witnessing growth, exceeding 20 percent annually. By aligning GST with GGR, we can sustain this growth momentum and enhance competitiveness, particularly against offshore gaming operators,” the spokesperson elaborated.

The frequency of illegal offshore gaming operators presents a challenge for the Indian gaming industry: tax evasion and fund outflows. These operators, often disguised as legitimate entities, engage in illegal activities such as money laundering, posing a threat to the integrity of the domestic gaming landscape.

The industry’s advocacy efforts gain importance against the backdrop of Prime Minister Narendra Modi’s recent interaction with select Indian gamers. During the exchange, concerns regarding the perception of gaming as akin to gambling were raised, prompting calls for a clear differentiation between real-money games and skill-based gaming.

Following the interaction, Prime Minister Modi himself got into various gaming platforms, highlighting the potential of the gaming industry as a driver of economic growth and innovation.

The stakeholders are optimistic that collaborative efforts with the government will make the way for a regulatory framework that nurtures innovation, encourages growth, and safeguards against illegal activities.