Increasing GST on online gaming will result in loss of government exchequer

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- The increase in GST will increase the tax burden on gaming platforms by 1100 percent

Gu Jarat is currently in the limelight as the epicenter of semiconductor manufacturing. While the state government is working aggressively to attract more investment and increase domestic GDP, the recent decision of the Ministry of Finance, Government of India and the GST Council threatens to put a heavy burden on taxpayers and the state exchequer. The GST Council recently announced a decision to increase the platform fee on online gaming from 18 percent to 28 percent of the total case value of player contribution in gaming.

This will increase the tax burden on legitimate domestic online gaming platforms by 1100 percent, driving gamers to offshore and illegal platforms that pay no taxes. Offshore betting companies from India alone generate annual revenue of Rs. 90,000 crore in revenue and growing at the rate of 25-30 per cent every year. After the introduction of 28 per cent GST on legal gaming, the domestic industry will shrink and the double whammy of losing offshore betting and gambling businesses and dealing with tax evasion by offshore operators will seriously hit the taxpayers' pockets and the state exchequer.

Several experts, including former finance secretary Subhash Chandra Garg, have warned about this. Garg has said that if the online gaming industry shuts down or starts operations outside the country, the tax revenue will decrease significantly. Even if the industry survives but massive deregulation is imposed, the government will have to work hard to maintain the current revenue levels.

In 2020, the legitimate domestic online gaming industry contributed Rs. 20 billion and this figure by the year 2025 will be Rs. It is expected to reach 35-50 billion. However, reports are now sounding alarm bells that the GST Council's decision to increase the tax rate on online gaming could lead to a potential drop in GST revenue of up to 72.45 percent.

Imposing high taxes on online gaming will encourage offshore gaming platforms which will ultimately affect legitimate businesses. India has always been at the forefront of adopting new technologies. Digital entertainment, gaming and sports are the future of humanity. The council should understand the harm caused by its decision and make a more sensitive and practical policy. The shift of consumers to illegal and offshore gaming platforms is not only a major threat to legitimate businesses, but also a late revenue threat to the government.

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