Earlier, the Goods and Services Tax (GST) rate applied to the platform fees within the online gaming sector was 18%. This tax primarily targeted the fee charged by gaming platforms for providing services.
The New GST Rate of 28%
In a meeting on July 11, 2023, the GST Council decided to raise the tax to 28% for online gaming, casinos, and race courses. This new tax regulation officially came into effect on October 1, 2023. The higher rate has caused significant concern within the online gaming industry.
Industry Concerns on the 28% GST
Online gaming companies have expressed worries about the steep 28% tax rate, citing fears that it could negatively impact business growth and player engagement. Additionally, companies are facing retrospective tax notices, adding further challenges.
What to Expect from the Upcoming GST Meeting
In the next GST Council meeting, central and state tax officials are expected to present a detailed "status report" on taxation related to online gaming, casinos, and race courses. This report will highlight the GST revenue collected from the online gaming sector before and after the October 1 implementation of the new rate.
Will There Be Any Tax Relief?
While the online gaming sector is hopeful for a reduction in the 28% GST, the detailed report will help determine whether the government might reconsider the tax rate or implement further measures.