Indian government imposes 28% indirect tax on online gaming companies
In a major blow to the thriving $1.5 billion online gaming industry in India, the government has decided to impose a 28% indirect tax on the turnover of these companies. This announcement comes as a setback for popular Indian gaming startups like Dream11 and Mobile Premier League, which have received backing from foreign investors such as Tiger Global and Sequoia Capital.
The decision to impose this tax was made by the GST Council, a body comprised of state finance ministers and chaired by the federal finance minister. The council had previously formed a panel to consider taxing various gambling activities, including casinos, horse racing, and online gaming. However, it had not arrived at a definitive decision regarding the imposition of a 28% Goods and Services Tax (GST) on bets, gross gaming revenue, or platform fees.
Sudhir Mungantiwar, the minister from the state of Maharashtra, has announced that the tax on online gaming companies will be levied without differentiation based on the skill or chance elements of the games. This means that the GST will be applicable to the companies’ gross revenue and total prize pool.
Roland Landers, CEO of The All India Gaming Federation, expressed his discontent with this decision by the GST Council. He argues that it is unconstitutional, irrational, and egregious. The industry players believe that the tax imposition will have negative consequences on the gaming sector.
The implications of this decision on the online gaming industry in India and the reactions from key stakeholders are yet to unfold.
[Image Source: The Star]
(Source: Reuters, Reporting by Nikunj Ohri; Writing by Aftab Ahmed; Editing by Mark Potter and Jane Merriman)
Credit: The Star : Tech Feed
