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GST News Details

Uncertainty Yet Again as GST Council Postpones Gaming Tax Decision for September

The Goods and Services Tax (GST) Council has postponed its latest planned meeting by at least a month, media reports cite unofficial government sources. It appears that the GOMs is not yet ready with their report on the matter, pushing back the important forum towards the end of September.

What’s At Stake In The GST Debate?

Besides GST rates for online gaming, casinos and real-money platforms like poker and online blackjack, the Council also needs to recommend legislative amendments required for setting up GST Appellate Tribunals (GSTAT).

While most gaming studios and legal experts are anxiously waiting for these decisions, the delay may not necessarily spell bad news for the industry. The fact that the ruling is already taking a few months may simply mean that the Ministers and their teams are considering the issue properly, and in-depth, and are reluctant to make a hasty decision.

Then again, gaming companies have been stuck in limbo for a long time, unable to plan their mid- and long-term strategy and operations in the Union market. Ever since the GST was introduced in 2017, online gaming businesses have been fighting black markets and offshore competition. The latest developments are eagerly awaited to find out if they will be priced out of an ever more globalized gaming market.

The latest changes to the GST on desi gaming – both casual and real-money genres – were spoken about in the spring for the first time. The GoM, led by the Finance Ministry, was supposed to analyze casinos, horse races and online games and present a final report by mid-August. Their July 12 meeting did not reach any conclusions, however, and the submission has been delayed by yet another month.

Much like other forms of digital entertainment, online gaming attracts an 18% GST rate for the time being. This is based on gaming companies’ revenues and not their total turnovers, meaning that players are not charged more for contest entry fees (tickets, deposits, etc.). Gaming companies currently need to pay GST on their pre-tax earnings.

However, the GoM recommended that a 28% GST be levied on online games and casinos since they represent premium consumption and are not an essential service in their view. Moreover, there were fears that the tax would be requested upon the total turnover value, effectively raising prices for end-users by a third.

Such a move would inevitably make desi tech startups and gaming stakeholders even less competitive compared to offshore platforms and global gaming giants that do not even pay income tax in India. A number of gaming startups were planning to relocate or even shut down operations if that would have been the case.

The latest – albeit unofficial – rumours were that the 28% GST was likely to be imposed on Gross Gaming Revenue or the company service fee, effectively. Avoiding a blanket GST on gaming turnover would be welcome news for the industry, according to the All India Gaming Federation, although no one dares rejoice just yet. As things stand, the gaming startups will have to wait at least a month before any further notice on the matter.

Source : Mangalorean