• Notification Date: 10-12-2022
  • Notification No: N/A

GST accepted on online Gaming Revenue, not on Entry Fee

The online skill-based gaming industry accepts the government raising GST on online gaming from 18 percent to 28 percent. But the industry demands the tax be levied only on gross gaming revenue (GGR) and not on contest entry amount. If tax is applied on entry fee, then the amount could hit the $2.2-billion sector. According to reports, the upcoming GST Council may consider imposing a 28 percent Goods and Services Tax (GST) on the total amount rather than the current practice of 18 percent on GGR.  

GGR is the fee that is charged by an online skill gaming platform as service charges to facilitate the participation of players in a game on their platform while Contest Entry Amount (CEA) is the entire amount deposited by the player to enter a contest on the platform. 
Trivikraman Thampy, the co-CEO of Games24x7, said that being an industry, they unanimously accept that GST continues should be levied on the gross gaming revenue, but not on the contest entry amount. The government's decision to increase the tax rate from 18 percent to 28 percent GST on the gross gaming revenue already increases tax revenue for the exchequer by around 55 percent. The industry is yet to absorb this. Now, levying the tax on the contest entry amount will make the industry completely unviable, adding, the increased tax burden will have to be passed on to the consumers, leading to a ripple effect in terms of legitimate businesses losing customer base as players move to grey market and offshore gaming platforms who have no tax liabilities in India. This is a lose-lose scenario for the government, the consumers, the legitimate businesses in the sector as well as any existing or potential investments that the sector attracts, he added. 

The GST Council is expected to meet on December 17, 2022, in a virtual format. The panel, headed by the Union Finance Minister, may take up agenda related to Casino, Race Course, and Online Gaming industry in the meeting. Previously, the 47th GST Council meeting held in June had directed that the Group of Ministers on Casino, Race Course, and Online Gaming re-examine the issues in its terms of reference based on further inputs from States and submit its report within a short duration. Another player in the space Digital Works Pvt Ltd said the industry's ask for GST on gross gaming revenue, rather than entry fees, is a crucial step towards ensuring the growth and development of this sunrise sector in India.