Rajeev Chandrasekhar, the Minister of State for the Ministry of Electronics and Information Technology (MeitY), stated in a meeting today with top executives and founders from gaming companies that the MeitY is creating one integrated view on skill games that will trickle down to all ministries and across states.
The meeting, as reported earlier, was held to discuss the draft online gaming rules proposed by the ministry. Chandrasekhar stated the above while responding to a specific query by technology and gaming lawyer Jay Sayta regarding the Finance Ministry’s conflicting viewpoint with the IT ministry on the subject of Games of Skill vs Games of Chance as also the view held by Director General of GST Intelligence that when there are stakes involved in any game of skill like rummy it falls within the definition of gambling and betting.
Back in September 2022, the GST Intelligence unit slapped an intimation notice on GamesKraft and froze bank accounts of the company for alleged tax evasions. Currently, skill-based games are paying 18% GST on platform fees and games of chance need to pay 28% on the face value of every bet as per Rule 31A of the CGST Rules. However, the GST Department is asking for 28% GST on face value of bets even for skill-based gaming platforms creating a huge potential liability for such companies.
While notifying Gameskraft, the Finance Ministry refused to acknowledge this distinction. The Karnataka High Court awarded an interim relief to Gameskraft after the company challenged it.
Some states have refused to recognize the distinction between skill-based and chance-based games which has negatively impacted Indian online gaming enterprises. Skill-based games are currently prohibited in states like Assam, Andhra Pradesh, and Telangana.
One prime example being the current dispute in Tamil Nadu regarding the ban on online rummy. Many of the skill-based games have been put under the category of games of chance or gambling by the current government.
The Supreme Court, however, has categorised games like rummy and poker under games of skill and the companies offering those services as business activities protected under article 19(1)(g) of the Indian Constitution.
Meanwhile, speaking about the meeting, Mr. Roland Landers, CEO, All India Gaming Federation, said, “We welcome MeitY’s willingness to take the time today and consult with industry stakeholders on the draft rules. The meeting was fruitful, and we believe that both the government and industry have benefited from a clearer understanding of the future outlook for the gaming industry in light of the proposed rules. The framework offered by MeitY will go a long way towards creating a balanced environment for online gaming that provides for innovation within the confines of strong consumer protection standards.”
Last week, MeitY also held a meeting on draft online gaming rules with parents, students and educationists where aspects such as the definition of online games, permitting age-appropriate certification, and giving the SRO more authority to regulate in-game material, addiction, and psychological problems brought on by such games were discussed at length.