These gaming companies have flagged that recent campaigns by the real money gaming industry “project a homogenous image and suggest that the entire games industry of India is adversely affected” by the proposed 28% goods and service tax (GST) on online gaming. The letter comes in the wake of 28% GST imposed by the GST Council on the full face value for online gaming earlier this month. The GST Council exempted games that are played without stakes, these will be taxed at 18%.
What the letter says
ET has reviewed the copy of the letter which has been sent to the Prime Minister’s Office, the ministry of electronics and information technology (MeitY), and the ministry of information and broadcasting (I&B). “Globally, irrespective of skill or chance, a clear distinction is drawn between games involving wagering (categorised as ‘iGaming’) and games without wagering (categorised as ‘video games’). Unfortunately, in India, these mutually exclusive categories have been consolidated under the common umbrella of ‘online games’,” said the letter.
“…we wish to express our sincere appreciation to the GST Council, the Department of Revenue, and the Government of India for exempting Video Games from the recent 28% GST decision. Recognising that Video Games do not involve any form of wagering or staking, we are truly grateful for this thoughtful consideration, which acknowledges the diversity of business models within our industry,” the letter added.
Incidentally, this is not the first time that video game developers have sought this demarcation. The need to make clear differentiation has been there since quite some time and was also raised following the notification of online gaming rules issued by MeitY in April.
Real money gaming industry’s plea
The real money gaming industry on its part claims that the GST Council’s decision of 28% tax could drive users away to illegitimate gambling and betting platforms. In addition, investors in these companies have also argued that the decision could lead to a potential write-off of the $2.5 billion capital invested in the sector.
The letter requests the Indian government to implement a distinct recognition of the games industry in India, and to avoid video games and e-sports from being clubbed with real money gaming and online fantasy sports.
