The increase in taxation would not only have a catastrophic impact on the industry but would also encourage offshore operators who would circumvent Indian tax jurisdiction by hosting games in some other country. 24×7 gamessaid the co-chief executive of Trivikraman Tampy.
“It would be a triple setback: the industry loses, the government loses tax revenues and players lose as they would be exposed to unscrupulous operators,” he added.
An association of skill-based online gaming platforms has appeared before the authorities for maintenance Taxes on goods and services (GST) at present for the sector which has 400 operators employing about 45,000 people.
The problem took hold as the GST Council at its next meeting, it could file a request for a rate hike on casinos, racecourses and online gaming services to the 28% suggested by a group of state finance ministers. However, the meeting’s agenda has yet to be finalized.
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A decision as to whether the tax should be levied on the gross or net valuation would be made after further deliberations at the official level.
Currently, casino, horse racing and online gaming services attract 18% of GST.
In May of last year, the government had established a group of state ministers for better evaluation of casino services, online gaming portals and racing courses for collecting the GST.
Online gaming industry it is directly linked to the growth of many other industries such as semiconductors, banking, payment gateways, telecommunications, fintech, sports and entertainment.
According to Tampy, GST is currently being charged on the platform’s fee, referred to as Gross Gaming Revenue (GGR), rather than the full amount put together for a game.
“International best practices also highlight the optimal tax range for the online gaming industry between 15 and 20%. Our current GST rate of 18% is in line with best practices and reduces the incidence of illegitimate operators. “, he has declared.
Online skill games are inherently different from gambling and that the skill-based gaming industry does not constitute gambling or lottery, he added.