Online gaming industry plans to approach new government for reduction in GST

The online gaming industry plans to approach the new government after the general elections to request a reduction in Goods and Services Tax (GST). They propose that the tax be computed on the Gross Gaming Revenue (GGR) instead of the full face value. This proposal is based on the belief that the current high tax rate is unsustainable for startups in the sector. A person familiar with the matter shared this information.

“After elections, the industry will give representation to the new government to review the 28 percent GST on full face value on online gaming. The industry cannot exist on 28 percent GST on face value. The sector would no longer be a startup ecosystem. The high tax rate will thin out the competition and only bigger players will survive because of the humongous tax,” the person told Moneycontrol.

“The industry was growing at over 20 percent year on year before October 1, 2023. In six years, at this growth rate, the same revenue of Rs 1100 crore per month can be reached even with the GST computed on GGR. But at least the sector will grow and will be able to compete with the offshore gaming companies which are not registered in India,” the person said.

Many offshore operators masquerade as legal entities offer games and indulge in money laundering. These platforms accumulate funds in proxy accounts and then transfer them via illegal means such as hawala, cryptocurrency, and other illegal channels.