Online gaming in India likely to attract 28 percent GST instead of 18, calculation method should be adjusted – Technology News, Firstpost

The Indian government is likely to tax online gaming at a rate of 28 percent under GST, instead of the current 18 percent. It is also likely to propose a new revised formula for calculating the amount of GST charged.

Online gaming in India likely to attract 28 percent GST instead of 18, calculation method needs to be adjusted

The Indian government has finally decided that online games essentially fall under the category of “non-goods” and therefore should attract 28 percent GST. Image credit: Pexels

Currently, online gaming attracts 18 percent GST, with the tax being imposed only on total gaming revenue, which is the fee charged by online gaming portals.

The Group of Ministers (GoM), chaired by Chief Minister of Meghalaya Konrad Sangma, in its previous report submitted to the Council in June, proposed a Goods and Services Tax (GST) of 28 per cent on the entire value of money paid by a player or customer, including entry fees to the competition. , without distinction as games of skill or chance. However, the council asked the Moroccan government to reconsider its report.

After that, GoM took the views of the attorney general and also met with stakeholders from the online gaming industry.

Although GoM has deliberated about separate scopes and definitions of “games of skill” and “games of chance”, and on what basis certain games might be classified as games of skill or games of chance, it finally decided that online games primarily fell into the category. of “defective goods” and must therefore attract GST of 28 per cent.

A “negative good” is essentially a good or service whose consumption is considered unhealthy, degrading, or socially inappropriate due to perceived negative effects on the consumers themselves.

A GoM report in June suggested that GST should be charged on the entire amount received from players.

Imposing 28 percent GST on the full amount, which a player deposits for a game for both categories of online games, would reduce the prize money left for distribution and turn players away. Industry experts said this could also encourage online gamers to illegal portals that don’t deduct taxes. Industry insiders fear that a higher tax rate on the full amount players deposit could mean the death of the industry in India as we know it.

Online gaming has seen a huge jump in users during the Covid lockdown. According to a KPMG report, the online gaming segment will grow to Rs 29,000 crore by 2024-25 from Rs 13,600 crore in 2021.

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