Online gaming companies seek more clarity on GST

economictimes.indiatimes.com:

Online gaming companies, which have slammed the Goods and Services Tax (GST) Council’s decision to impose the maximum 28% indirect tax on the full face value of the business, said they are awaiting details on the applicability of the levy before deciding their next steps. “Once the amendments are made to the GST law to include online gaming under the ambit… we would urge the government to issue a set of FAQs in the way they had put forth for tax collected at source (TCS) norms for cryptocurrencies,” said an executive at a unicorn gaming platform.

Gaming companies are learnt to be discussing the course of action and deciding on the key clarifications they need from the government before approaching the finance ministry. These include queries such as whether the tax will be levied if a user enters a new contest with the winnings from a previous one.

“If the tax is only being applied on the first instance — on the money that the user enters the game with — then the impact may not be a death blow,” a top executive at a fantasy sports company said.Also read | Online gaming companies say only illegal platforms will gain from 28% GST On Tuesday, the GST Council agreed to impose a 28% tax on online gaming at the full face value, shocking the industry. Companies had been expecting the tax to be levied on the gross gaming revenue (GGR), the platform fee that they charge for facilitating the games.

Currently, online real-money gaming companies charge a platform fee in the range of 8-15%, said one of the sources cited above. Globally, jurisdictions have taken both routes — imposing tax on contest entry amounts and GGR.

For example, countries like the UK, Singapore, Australia, Denmark and Italy levy the tax on GGR. Countries such as