Real money gaming industry reacts with shock to GST on deposits

Industry bodies said the decision to tax real money gaming platforms on deposit value instead of commission would be a body blow to the industry.

July 11, 2023 09:04 pm | Updated July 13, 2023 02:03 pm IST - NEW DELHI

The real money gaming industry, which comprises fantasy gaming apps, poker and rummy apps, and other such services where players can risk money for winnings, denounced the GST Council’s decision on Tuesday to tax players’ entire deposits as opposed to the commission charged by the firms. The industry is referred to as ‘online gaming’ in legal and taxation terms.

“We believe this decision by the GST Council is unconstitutional, irrational, and egregious,” Roland Landers, CEO of the All India Gaming Federation said in a statement. “The decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities.”

“This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms,” Mr. Landers claimed.

This “decision will have a chilling effect on the $2.5 billion of FDI already invested by investors and potentially jeopardise any further FDI in the sector,” Joy Bhattacharjya, Director-General of the Federation of Indian Fantasy Sports, said in a statement.

The real money gaming industry has been advocating fiercely against this move in the last few months. Under this regime, players would essentially have to gain 28% over their deposits just to be able to withdraw what they initially put in, drastically altering the calculations that might influence a decision to risk money on such games.

“All sorts of businesses have to be kept alive,” Finance Minister Nirmala Sitharaman said in response to some of these reactions at a press conference. “Casinos in Goa and Sikkim yield a lot of revenue for States. When discussions began on this, some one even asked if tax should be lower than food items to promote the casino-catalysed tourism revenues. A discussion also took place on the moral question. No one wants to kill an industry, but they can’t be encouraged to such an extent over essential goods and services.”

“This recent growing sector was expecting relief with clarification on GST only being applicable on the platform fee earned by them,” Abhishek Jain, National Head & Partner, Indirect Taxes at KPMG, said.

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