28% GST on online gaming big blow to $1-trillion digital economy target: IAMAI
GST Council's decision to levy a 28% tax on online gaming is a huge blow to India's goal to become a USD 1 trillion digital economy by 2025, industry body IAMAI said on Wednesday. The Internet and Mobile Association of India (IAMAI), which represents internet based companies, said that the net effect of 28% GST (Goods and Services Tax) levy will result into around 1,000% increase in tax on the industry, cause irreversible damage to the USD 2.5 billion investments in the Indian online gaming startup ecosystem, and lead to a complete halt on any prospective foreign direct investment (FDI).
«It shall also serve as a huge blow to India's ambitious target to achieve a USD 1 trillion digital economy by 2025,» IAMAI said. GST Council decision to impose a 28% tax has been unanimously opposed by the online gaming industry.
Online gaming companies have repeatedly asked the government to levy less than 18% GST on skill-based gaming. Industry players have said that the 28% GST on real money games places them at par with gambling.
IAMAI said that the new tax structure is contrary to global best practices, where GST on online gaming is levied on Gross Gaming Revenue (GGR) or the platform fee. «Taxing the country's legitimate online gaming industry with gambling activities will not only massively dent the burgeoning online gaming sector but will also threaten to make the entire USD 20 billion Indian online gaming sector an unviable business model,» IAMAI said.
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