The GST council recently announced the increase in taxation to 28% on full value from 18% on gross gaming revenue. As a result of the decision, the gaming community has written a letter to Nirmala Sitharaman, Minister of Finance, addressing various concerns, which could thereby adversely impact earnings. “We are concerned that gaming companies may be unable to absorb the tax burden, which may also induce many unassuming and innocent players to seek offshore platforms to continue playing. This raises issues of user safety, as Indian platforms have implemented measures to protect users from abuse and mistreatment, particularly for players under the age of 18 and have now come under a robust and strict regulatory regime, which is being administered by MeitY,” the letter said.
The letter also stated that the gaming community had conducted repetitive surveys and it resulted in over 9,000 gamers stating that they would quit online gaming altogether. It also highlighted that for some gamers, it was a means to their livelihood and imposing high taxation rates would result in a loss of income for those who pursue gaming professionally. “Excessive taxation on skill-based games effectively transforms them into games of chance, robbing them of their intellectual essence and discouraging newcomers from engaging,” Jagdeep Singh, a professional poker player, said.
Moreover, the letter stated that the decision of the GST Council is overlooking their fundamental right of livelihood guaranteed by Article 21 while also requesting the finance minister for a collaborative approach involving representatives from the gaming community leading to a balanced and informed decision regarding the taxation of online gaming.
According to the letter, a differentiation in online games is necessary as there are various activities, each with varying degrees of competitiveness and skill levels. Categorizing all forms of online gaming under a single tax bracket fails to acknowledge the distinct differences in skill, expertise, and the diverse nature of these gaming activities.”The government should understand the basic difference between a game of skill and a game of chance and regulate them accordingly,” Neeraj Sattawat, a professional poker player, said.
The decision has received backlash from industry players and gamers alike. However, it remains to be seen what the next plan of action for the government would be.