The Internet and Mobile Association of India (IAMAI) on Monday called on the GST Center and Council to maintain the status quo on GST rates on online skill games to allow the industry to survive.
The current rate of GST on this sector of the online skill games industry is 18% on Gross Gaming Revenue (GGR) and 0% on Contest Entry Fee (CEF), which is legal, fair and complies with international tax standards for this sector.
The industry body said imposing an additional 28% GST on the GGR would increase the incidence of taxation to around 55%, which is clearly unfair to an industry that is considered a trade legitimate – a profession, not a parlor game. chance.
“This would render it unviable for the vast majority of players (consumers), which would negatively impact the net collection of GST from the sector,” he said in a statement.
Moreover, if a 28% GST is imposed on the EFC, the incidence of the GST is multiplied by nearly 10 (1,100%).
“Thus, it is very likely that the industry and the revenue from the GST, this one, will cease to exist,” the association said.
Online games have paid a cumulative GST of Rs 6,000 crore for the past four years and are expected to pay Rs 16,000 crore between 2022 and 2025.
Much of this is believed to come from online games of skill, given the transparent, measurable and non-monetary mechanism that this sector follows.
According to IAMAI, the impact of any change in the current GST incidence would mean that many offline service providers will go underground, causing further loss of revenue on the one hand.
“On the other hand, for online games of skill, that would be like killing the proverbial goose that lays the golden egg,” he said.
Globally, many jurisdictions in the EU, UK, US, etc. only levy a tax on the GGR.
Studies show that a tax rate on the GGR between 15 and 20% offers the most favorable returns to the tax authorities.
The Supreme Court has clearly ruled that games of skill are legitimate occupations and, therefore, are protected by sections 19(1)(g) and 14 of the constitution.
“It would be contrary to the letter and spirit of the Supreme Court judgment to equate games of skill with games of chance – gambling, betting or betting,” the industry body said.