28% GST on online gaming, horse racing & casinos, know what stakeholders have to say

“We believe this decision by the GST Council is unconstitutional, irrational, and egregious. The decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities,” says Roland Landers, CEO – The All India Gaming Federation.

   
Online Gaming

The GST Council decided on Tuesday, July 11, that there will be a 28 per cent GST (Goods and Services Tax) assessment on the full value of gaming, horse racing, and casinos.

Well, this has raised a breeze of concern inside the gaming industry. Here is what the industry stakeholders have to say about the recent announcement made by the GST Council.

“We believe this decision by the GST Council is unconstitutional, irrational, and egregious. The decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities,” says Roland Landers, CEO – The All India Gaming Federation.

“This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms.”

He continued, “It is very unfortunate that when the Central Government has been supporting the industry – in terms of online gaming rules, clarity on TDS, etc that such a legally untenable decision has been taken, ignoring the views of most GoM states who studied this matter in detail.”

“We hope that the Government will reconsider this reccomendation and not implement it, as it will be catastrophic for the 1 trillion dollar digit economy dream of the Hon’ble PM,” Landers concluded.

Another industry stakeholder, Siddharth Sharma, SVP – Business Strategy at Head Digital Works reacted, “This is an unexpected move by the GST Council, which will have far-reaching consequences for the industry and question its basic viability. Not only will this burden hinder the growth of this nascent industry, its application will compress new innovation and opportunities.”

“This decision does not take into account the pleas of the industry, global precedents, and even counters the favourable regulatory environment being built up for online gaming in recent months. Businesses have a legitimate concern that this move will push users towards illegitimate betting and gambling operators that don’t follow the laws of the land,” he added.

Reacting to the same, L. Badri Narayan, Executive Partner, at Lakshmikumaran & Sridharan Attorneys, told “This is an unexpected development for the industry in the light of the positive steps in TDS and self-regulatory regime. After taxing 100 per cent of the winning amount under new TDS regime, to tax full value of entry fee will have a significant impact on prize pool and incentive for players.”

He further highlighted, “The differential treatment for games of chance like casino and games of skill played in online gaming is arbitrary and will face legal challenges. This decision will have an adverse impact on the nascent sector and future investments.”

“As highlighted in GST Council, this will aid in the further development of grey market operators and dark web affecting customer interest. The approach of the GST Council is a deviation from internationally accepted taxation practice,” Narayan added.

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