New Delhi: The GST council is likely to meet on August 2 to decide on the implementation of GST on online gaming. The council will also decide whether the 28% GST will be levied on the deposits or on every game.
The revenue secretary on Thursday acknowledged that levying 28% tax on every game will lead to repeated taxation of the same rupee resulting in the effective tax rate going as high as 50-70%.
He clarified that while there was no possibility of taxing the GGR, which is internationally prevalent in countries like the USA, UK, Australia, whether the GST will be levied on deposits, or every game is a decision that the GST council will take.
There has been a widespread concern on the debilitating effect that taxing every game will have on the industry. Earlier last week, over 30 global and Indian investors wrote to the PMO noting that taxing every game will have a cascading effect and will lead to an effective taxation of 50%-70%, which is unheard of and will definitely render the industry unviable.
Weighing in on the issue, Dr. Deepali Pant, former Executive Director of RBI said,“Raising the GST rate from 18% to 28% in my opinion is entirely reasonable. After all, many industries including the entertainment sector, which is what I believe online gaming companies also offer, pay GST at 28%. The issue does not lie with the 28% uniform levy of GST, but the change in value from platform fee or commission to full-face value of every game seems unjust.”
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