The GST Council's decision to levy 28 per cent GST on the turnover of online gaming has led to mixed reactions. The Goods and Service Tax (GST) Council decided to impose 28 per cent GST on online gaming, horse racing, and casinos last week. The Indian video gaming industry is worried that all games, be it skill gaming or otherwise, have been clubbed under this category.
The recently revealed 28% GST does not impact video games since the Indian Video Games Industry (valued at $812 million as of 2022) continues to be taxed at 18 per cent. A consortium of more than 45 Indian video game companies has written to PMO, MeitY, and the I&B Ministry requesting the government to categorise video games separately and have suggested that RMG/Fantasy should be referred to as ‘iGaming,’ the way it is defined in the rest of the world.
'Proper Classification Can Bring In Billions In Future Gaming Revenue'
"Gamers know the difference between Real Money Gaming, Fantasy Sports, and video games. The rules should evolve to reflect these differences as well. This would ensure the best practices — and more importantly — protections for India's 500 million plus gamers," said Roby John, CEO and co-founder of a leading gaming platform named SuperGaming.
Some of the companies who have joined in on the campaign are Nodding Heads Games, the developer of Raji: An Ancient Epic and FAU-G developer Dot9 Games. "Globally, irrespective of skill or chance a clear distinction is drawn between games involving wagering (categorised as "iGaming") and games without wagering (categorised as "Video Games"). Unfortunately, in India, these mutually exclusive categories have been consolidated under the common umbrella of 'Online Games,'" the joint statement reads.
The statement also pointed out that the prevailing homogenisation cultivates an unfair social stigma around video games and also clouds investor perception and restricts strategic partnerships. Global investors can get the impression that the Indian regulatory system does not differentiate between video games and RMG/fantasy Sports (iGaming) and thus applies blanket regulations to both industries. The gaming companies have requested an audience with the government bodies to share the views of the video gaming industry and discuss the way forward to promote investor confidence and clear the room for a secure ecosystem for Indian gamers.
"While the revised GST of 28 per cent will be levied on “Online Games”, it certainly does not apply to esports. It should be made clear that the 28 per cent GST is for games which involve staking/wagering of money. Esports inherently does not involve any form of staking/wagering elements and hence has no impact," said Anurag Khurana, CEO and founder of Penta Esports. Jemish Lakhani, who founded a homegrown gaming app XSQUADS Tech said, "The Indian video game industry is becoming self-reliant (Aatmanirbhar), but a 28 per cent GST on all game types could stall its growth. We must differentiate between Real Money Games and Video Games to avoid negative impacts. By fostering a favourable tax structure, we can unlock the Video Game industry's economic potential, boost India's position in the global gaming market, and secure billions in future revenue for the country."