with the aim of discouraging young people from getting addicted to online gaming. The GST council has agreed to impose a 28% tax on online gaming on casinos as well as horse racing. Now this goods and services tax is likely to be levied on the full face value, which is the total value of bets placed on a single platform. So how exactly will this 28% GST impact gaming in India? Well after the new GST rate is implemented, ₹28 will be charged per ₹100 spent on online games Online gaming companies are saying that le this 28% GST will limit their ability to invest in new games, impact cash flows as well as business expansion. Experts, meanwhile, also point out that this will not only discourage players from playing, but the professionals for whom it's a livelihood will be burdened by taxation. It may also force them to play on offshore platforms. Meanwhile, the All India Gaming Federation, which represents companies like Games Craft and Winsor, say the decision by the council is unconstitutional and irrational. In the post GSC council meeting, our finance minister was asked if governments want to demotivate E gaming given its adverse impact on Children. Raman said that the council does not want to end any industry. But to quote the finance minister, they also don't want to give the wrong message in the country by lowering the tax rate on such industries to the level of essential goods. So tax on E gaming would be imposed without making any differentiation, based on if the games require skill or based on chance. The finance minister said that a discussion was held on whether an online game is skill based or chance based. She clarified that they are not looking at a game if it's skill based or chance based or both, she said. We are purely looking at the value it generates that can be taxed. Leaders in the industry highlight that there is a fine line between skill based games and casino betting apps, and they assert that skill based games and apps engaged in betting or casinos should not be treated in the same manner. The GSC Council has recommended to remove this critical distinction between games of skill and games of chance, which has always been a determining factor in applying rate of tax and valuation. Now this is being seen as a setback for the Indian gaming industry as they were expecting that at least the levy will be on the margin and not the full face value. This is online gaming players have repeatedly urged the government as well as the GST council to levy 18% GST on the entire segment, instead of the 28% that has been recommended by the group of ministers. But online gaming federations and companies have warned that the rising gaming economy will take a big hit and trigger economic stress, restrict job creation and curtail economic growth within this sector. They also warned that this new tax decision could shift users to illegal betting platforms, leading to user risk as well as loss of revenue for the government.
