GST Council’s Decision Disappoints Gaming IndustryGST Council’s Decision Disappoints Gaming Industry The Goods and Services Tax (GST) Council, during its 53rd meeting, rejected the request from gaming companies to levy a 28% GST on the gross gaming revenue (GGR) instead of the entire bet amount. This decision has come as a blow to the industry, which had hoped for relief from the high tax rate. The 28% GST on skill-based online games has had significant consequences, including funding shortages, slower growth, job losses, and increased uncertainty. Manish Mishra, a partner at JSA Advocates and Solicitors, expressed disappointment at the council’s decision, stating that it was unexpected. According to a recent report by Ernst & Young (EY) and the US-India Strategic Partnership Forum (USISPF), the change in GST has caused global brand investors to withdraw from the Indian gaming market. Before October 2023, GST charges accounted for only 15.25% of sales. However, since the implementation of the new regime, GST costs have soared, consuming up to or even exceeding total revenue for many startups. The report highlights that startups in the gaming industry are now forced to operate at a loss. The council’s decision not to reduce the GST rate has been met with disappointment and concern from industry stakeholders, who fear that it could stifle the growth of the sector.
NEW DELHI: The Goods and Services Tax (GST) Council at its 53rd meeting decided not to accept the gaming companies’ demand to levy 28 percent GST on the gross gaming revenue (GGR) earned by the industry, and not on the full value of it. of bets placed in online games.
According to the gaming companies, the 28 percent VAT on skills-based online games has triggered a range of consequences, including funding constraints, reduced growth trajectories, job losses and increased uncertainty across the sector.
Manish Mishra, Partner, JSA Advocates and Solicitors, said the non-challenge of GST on online gaming “could be a major disappointment to the industry that was expecting relief from the high tax rate and retroactive requirements”.
According to the latest report from Ernst & Young (EY) and the US-India Strategic Partnership Forum (USISPF), some gaming companies reported a complete withdrawal of global brand investors since October 2023, just at the start of the new GST regime.
Before the change, GST charges constituted 15.25 percent of sales.
However, since October 1, 2023, GST costs have skyrocketed, with GST now consuming 50-100 percent of revenue for 33 percent of businesses and even surpassing total revenue for startups.
“These startups now have to operate at a loss,” the report states.
