Thursday, December 8, 2022
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Online gaming can be expensive, preparing to increase GST

The central government may increase the Goods and Services Tax (GST) on online gaming. However, along with this, the formula for calculating the amount for levying GST on gaming can be changed. The current rate of GST on online gaming is 18 percent. The Group of Finance Ministers (GoM) of states may suggest a tax of 28 percent on online gaming. There will be same GST for both types of gaming like game of skill or game of chance.

The GoM report may soon be given to the GST Council for consideration. Meghalaya Finance Minister Conrad Sangma-led GoM submits report to GST Council in June online gaming A tax of 28 per cent was recommended. This tax was to be levied on the amount of gaming including the fees paid by the player. No category like game of skill or game of chance was kept for taxing it. However, the council asked the GoM to reconsider the report. After this, the GoM held a meeting with the stakeholders associated with the online gaming industry along with discussing the issue with the Attorney General.

The GoM, after considering separate categories of games of skill or games of chance, had decided to tax both types of gaming as demerit goods. Demerit goods attract 28 percent GST. However, some relaxation can be given in the way of calculating this tax.

In an earlier report, the GoM had suggested taxing the entire amount received from participants. This includes the amount that a player Deposits for both types of online gaming. This will reduce the amount of prize money paid to the players and due to this many players may go to illegal gaming portals which do not deduct tax. There was a spurt in online gaming during the pandemic and the number of gaming users in the country had increased enormously. According to an estimate, the online gaming market is expected to grow from around Rs 13,600 crore last year to around Rs 29,000 crore in 2024-25.

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