A meeting of the Goods and Services Tax (GST) Council, chaired by Finance Minister Nirmala Sitharaman, was held via videoconferencing on August 2. The issues related to the 28 percent tax levy on online gaming, casinos and horse racing were discussed. Here are the highlights from the post-meeting press briefing, and the reaction which came from the industry players.
The live blog session has concluded. For more news, views and updates, stay tuned with Moneycontrol.com.
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The GST Council's recommendation to levy a 28 percent tax on the full face value or entry fees of online real-money gaming is expected to set the industry's growth back by "several years" and result in a significant fall in the industry's revenues, say industry stakeholders.
GST Council Meeting LIVE: New tax framework to adversely affect 80% of online gaming industry, says WinZO cofounder
"Taxing GST on deposits rather than the technology platform commission charged by the companies will make the unit economics unviable, wiping out 80 percent of the industry, with fatality concentrated in MSMEs and startups that house new age business models. This increase of 400 percent will solely encourage the rise of monopolistic play. Reasonable taxation can protect our over 500 million internet consumers from illegal offshore products,"saidSaumyaSinghRathore, co-founder,WinZO, an online gaming platform.
GST Council Meeting LIVE: 28% levy to have 'huge negative impact' on industry, says TMT Law Practice's Abhishek Malhotra
"The decision of the GST Council is going to have a huge negative impact on the (online gaming) industry. While it’s slated to be reviewed 6 months after implementation, there doesn’t seem to be any indication of a rollback. It is doubtful that the amendments would pass a constitutional challenge. The effort of MeitY (Ministry of Electronics and Information Technology) to enact the IT Rules is also nullified by clarifying that any bans on online gaming in any state shall not be impacted by this incidence of GST," said Abhishek Malhotra, Managing Partner, TMT Law Practice.
GST Council Meeting LIVE: Even shifting of base outside India would not help to escape levy, says Nexdigm official
"Even shifting of base outside India would not help to escape the levy, as the GST Council has decided to bring in GST registration requirements for such offshore companies for the purpose of discharging GST in India," saidSaketPatawari, Executive Director, Indirect Tax,Nexdigm, a financing advisory firm.
"It is evident that the government is firm on its position that online gaming, horse racing, and casinos would be treated at par with betting and gambling for the purposes of GST," he added.
GST Council Meeting LIVE: Majority of players will no longer be able to survive 'increased tax liability of 400-500%', says AIGF
“We believe the decision by the GST Council of valuation on deposits will severely impact the online gaming sector and result in a situation where a majority of players, including the MSMEs will no longer be able to survive in the face of the increased tax liability of 400-500 percent,"says All India Gaming Federation (AIGF), which represents over 120 online gaming companies.
"Only established and well entrenched skill gaming companies may be able to scrape through this change by using their existing capital reserves to counter the effects of substantially increased tax liability. However, even their revenues and valuations will significantly fall," it added.
GST Council Meeting LIVE: Focusing on entering new international markets a good strategy to manage GST levy impact, says Gamerji CEO
The GST Council's decision is expected to affect online gaming -- both RMG (real-money gaming) and non RMG's user base and overall gaming experience,GamerjiCEO Soham Thacker said."While we are going to obey the law of the land, we feel that focusing on entering new international markets will serve as a good strategy to manage the impact of the GST levy," he added.
GST Council Meeting LIVE: Taxing online gaming will not result in legalising them where they are banned, government clarified
During the post-GST Council meeting press conference, Revenue Secretary Sanjay Malhotra clarified that taxing online gaming will not result in legalising it where it is banned."Betting is already liable to GST today andit does not make it legal...Betting andgambling are illegal andliable to tax. Taxing online gaming will not result in legalising online games in those states which have banned them," he said.
GST Council Meeting LIVE: Smaller start-ups in online gaming segment may get 'badly hit' once higher GST comes into force, says Sudipta Bhattacharjee
According to Sudipta Bhattacharjee, Partner, Khaitan & Co, many smaller players in the online gaming segment may be "very badly hit" due to the higher GST levy, that is likely to come into force from October 1.
"The GST Council clarified that vis a vis online real money games (‘fantasy’ games as well as other real money games) the GST at 28% will be applicable on the actual cash/equivalent deposits made by players on an online gaming platform to commence gameplay and not on the winning amounts being redeployed by players for further gameplays. While this will certainly afford some amount of relief to the online real money gaming sector, many smaller start-ups in this segment may still get very badly hit once this higher GST comes into force – some of them possibly even before the expiry of the review period of 6 months as mentioned in the press briefing,"Bhattacharjee said.
GST Council Meeting LIVE: New tax framework will set Indian online gaming industry several years back, says industry body
The new tax framework, while clarifying and resolving uncertainty, will lead to a "very burdensome 350 percentincrease in GST and set the Indian online gaming industry back several years", said Federation of Indian Fantasy Sports and E-Gaming Federation (FIFS& EGF), which represent 50 Indian online gaming companies.However, it will allow gaming companies a fighting chance to innovate and rebuild the foundation of gaming in India, it added. The industry body also noted thatit appreciates the government for addressing the industry’s concerns on theissue of repeat taxation.
GST Council Meeting LIVE: DGGI to monitor offshore gaming companies if they operate without paying tax
The revenue secretary said that a monitoring cell under Directorate General of GST Intelligence(DGGI)is being set up to monitor offshore gaming companies if they are operating without paying tax.
The press briefing has concluded.
GST Council Meeting LIVE: Amendment to GST law not needed if 28% levy on casinos, online gaming requires changes after implementation
If the review after six months of 28 percent GST on casinos, online gaming requires some change in the tax rate or anything, the governmentwill be able to do it via anotificationand will not need the law to be amended again, Revenue Secretary said.
GST Council Meeting LIVE: Will insert provision for registration of offshore gaming companies, says Revenue Secy
"We will introduce a specific provision in the law requiring that registration will be needed for off-shore online gaming. It will be a simple process,"Revenue Secretary Sanjay Malhotra said.
GST Council Meeting LIVE: Voting not required on any decision taken in meeting today
Voting on any decision was not required at the GST Council meeting today as only a few states dissented,Revenue Secretary Sanjay Malhotra said.
GST Council Meeting LIVE: There are practical difficulties in 28% tax on casinos on GGR, says Sitharaman
Finance Minister Nirmala Sitharaman said the decision to levy a 28 percent tax on casinos and online gaming was taken after collective wisdom. The value of supply of online gaming and actionable claim in casinos will be on entry level, she said, pointing out that the Council discussed that if 28 percentis taxed onGGR, the net revenue will be only 11-12 percent.
The current 18 percentGGR results in net 8-9 percent in terms ofrevenue, Sitharamanadded.
GST Council Meeting LIVE: 28% tax on casinos, online gaming to be reviewed six months after implementation, says Sitharaman
The GST Council has agreed to review the 28 percent tax on casinos, online gaming, etc six months after implementation of the tax, FM Sitharaman said. The likely date of implementation is October 1, 2023.
GST Council Meeting LIVE: GST Act amendment to be taken up in this Parliament session, October 1 likely date of implementation, says FM
The GST Act amendment will be taken up in this Parliament session, FM Sitharaman said. The likely date of implementation is October 1, she added, further noting that the Council agreed to review GST on online gaming in six months after implementation.
GST Council Meeting LIVE: Delhi, Goa, Sikkim dissented over amendments to CGST
The decision to amend the CGST law had dissenting voices – Delhi, Goa, and Sikkim, FM Sitharaman said.Revenue Secretary Sanjay Malhotra has said the language of the CGST amendment will take into account Tamil Nadu’s ban on online gaming.
GST Council Meeting LIVE: Some states sought early implementation of 28% levy on online gaming
West Bengal, Bihar, Chhattisgarh, Uttar Pradesh, Himachal Pradesh, Maharashtra andGujarat asked for 28 percentGST on face value at the earliest, Finance Minister Sitharaman said.
GST Council Meeting LIVE: Delhi minister wanted 28% levy on online gaming reviewed, Sikkim, Goa representatives sought review of GST on casinos
Minister of Delhi wanted the 28 percent taxrate on online gaming reviewed, Finance Minister Sitharaman said, adding that Sikkim and Goa sought reconsideration of the levy on casinos.Tamil Nadu’s representative on GST Council expressed apprehension about what a 28 percent tax on online gaming would mean for the state as it is banned in the state, she added.
GST Council Meeting LIVE:
The GST Council meeting has concluded. The press conference to be addressed by Finance Minister Sitharaman is expected to begin at 7:15 PM.
GST Council Meeting LIVE:
Finance Minister Nirmala Sitharaman chaired the 51st GST Council meeting, via videoconferencing in New Delhi today. Among subjects that were discussed during the meeting include the 28 percent levy that was announced on online gaming, horce racing and casinos in the last meet.
