A uniform GST levy of 28 per cent is likely to be recommended by a panel of state finance ministers online gaming Sources said that whether it is a game of skill or a game of chance.
However, it is likely to suggest a revised formula for calculating the amount on which Goods and Services Tax (GST) will be levied.
Currently online gaming attracts 18 per cent GST. The tax is levied on gross gaming revenue, which is the fee charged by online gaming portals.
Sources said the GoM report is almost final and will soon be submitted to the GST Council for consideration.
The Group of Ministers (GoM), headed by Meghalaya Chief Minister Conrad Sangma, in its previous report submitted to the council in June had suggested 28 per cent GST on the full value, including the competition entry fee. Without distinction of player, skill or game of chance. However, the Council had asked the GoM to reconsider its report.
Thereafter, the GoM took the views of the Attorney General and also met the stakeholders of the online gaming industry.
Though the GoM deliberated on different definitions for ‘games of skill’ and ‘games of chance’, it was finally decided to levy 28 per cent GST on both.
The message should be clear that online gaming is a flaw. However, some relaxation in the methods of assessment may be provided, sources told PTI.
The GoM report in June suggested that GST should be levied on the entire amount received from the participant.
Charging 28 per cent GST on the entire amount that a player deposits for a single game for both the categories of online games will reduce the prize money left for distribution and take the players away from the legitimate tax deduction portal. Sector experts had said that this could encourage online gamers to flock to illegal portals that do not deduct tax.
Online gaming witnessed a boom during the Covid lockdown and the number of users in India increased significantly. According to a KPMG report, the online gaming sector is set to grow from Rs 13,600 crore in 2021 to Rs 29,000 crore by 2024-25.