IAMAI Deeply Concerned with GST Council’s Ruling on Online Gaming
As a representative of a sizeable segment of India’s online gaming industry, the Internet and Mobile Association of India (IAMAI) is deeply concerned by the GST Council’s decision to levy 28% GST on the full face value of the consideration instead of just the platform fee, and the many ramifications it will undoubtedly have on India’s digital economy and online gaming industry.
Online gaming is distinct from gambling & betting. Hence taxing India’s legitimate online gaming industry with gambling activities will not only massively dent the burgeoning online gaming sector but will also threaten to make the entire $20 billion Indian online gaming sector an unviable business model.
The new tax structure is contrary to global best practices, where GST on online gaming is levied on Gross Gaming Revenue (GGR) / platform fee. The net effect of this levy will result in an approximate 1,000% increase in GST on the industry and will cause irreversible damage to the $2.5 billion investments in the Indian online gaming start-up ecosystem and lead to a complete halt on any prospective FDI. It shall also serve as a huge blow to India’s ambitious target to achieve a $1 trillion digital economy by 2025.
Furthermore, it will put Indian gaming companies at a significant disadvantage against offshore gaming companies and put a hard stop to any plans of India becoming a global hub for online gaming.
The industry had proposed to the GST Council during consultations that the 28% GST should be charged on the platform fee, which has been the valuation method so far. IAMAI urges the GST Council and the Central government to reconsider the decision to levy a uniform 28% GST on full face value for online gaming.
IAMAI will continue to engage with the GST Council and other stakeholders to ensure that the final GST levels being considered do not hinder the innovation, FDI and the growth of this industry.
