The Group of Ministers (GoM) has on May 18 unanimously decided to recommend levying 28 percent goods and services tax (GST) on online gaming, casinos and race courses, sources told CNBC-TV18.
The tax will be imposed on initial betting and the gaming amount as the group is not in favour of levying GST on every bet or the winning amount, they added.
The sources added that the GoM report will be submitted in a day or two.
PTI reported on May 11 that the online gaming industry was pitching was GST to remain under 18 percent; claiming that a move into the higher tax bracket would “badly hit” the $2.2 billion industry.
The industry has 400 players and employs around 45,000 people. An association of online skills-based gaming platform has been formed to make their representation before the GST authorities.
Online skills-based games are e-sports, fantasy games, rummy and poker or chess, which are free to participate or involve platform fees.
GoM is a panel of state ministers set up by the Centre in May 2021 for better valuation of services of casinos, online gaming portals and race courses for levying GST.
Trivikraman Thampy, Co-CEO of Games24x7 told PTI that an increase in tax would “not only have a catastrophic impact, but also encourage offshore operators to circumvent Indian tax jurisdiction by hosting in other countries.
He added: "It would be a triple whammy — the industry loses out, the government loses out on tax revenue and players loses out as they would be exposed to unscrupulous operators.”
As per Thampy, international best practices show that 15-20 percent is the “optimal taxing bracket for the online gaming industry” and the current GST rate is in line with this. He added that the current tax slab also “reduces the incidence of illegitimate operators”.
He also sought to differentiate online gaming from gambling and lottery by noting that these are “inherently different from games of chance”.
The issue has gained attention as the GST Council is likely to take it up in its next meeting. But an agenda is not yet finalised.(With inputs from PTI)