IAMAI Urges GST Council To Maintain 18% Rate On Online Gaming

Internet and Mobile Association of India (IAMAI) in a statement issued on Monday urged the GST Council to continue maintaining the GST on online gaming at 18 per cent. Any increase in the GST rates in this sector will be detrimental to the overall wellbeing of the industry, seriously impacting the industry’s contribution to the nation’s economy through revenue generation, livelihood creation and foreign investments.

IAMAI notes with concern that there is an ongoing discussion to increase the GST taxation rate to 28 per cent for the online gaming industry. There is also no clarity on whether this will apply only to real money games or casual games as well, given that the former being a sub-segment of online gaming. Further, it appears from the reports in the media that for real money games this may be applied to the entire Contest Fee.

IAMAI is of the opinion that any such increase in the GST rate is likely to turn businesses in the sector unviable, leading to complete shutdown, which in turn will result in loss of a large number of jobs and a loss of investor-confidence debilitating India’s online gaming industry, which is currently witnessing fast and exponential growth of 35 per cent CAGR.

That apart increasing the GST rate will lead to an erosion of tax-base on the one hand, and encourage the spawning of grey markets on the other.

As of 2021, there is a sizeable consumer base of around 2.7 billion users globally, while the domestic market is projected to touch USD 5 billion by 2025, making it instrumental in creating the workforce of the future and a critical element of revenue generation.

Bearing in mind benefits brought to the nation’s economy by the online gaming industry, IAMAI requests the GST Council to retain stability in the taxation regime for the industry.