Online gaming companies urge govt to reduce taxes
startups that may not have the capital reserves to withstand such unprecedented tax increases. Further, this decision will encourage illegal offshore gambling operators, drive Indian users to them and ultimately lead to neither optimal tax collection nor the growth of the legitimate industry," said the letter.
The industry highlighted eight points outlining the potentially damaging impact of such a tax levy, urging the Prime Minister's office to reconsider the current recommendation. It suggested that the new tax could hinder the Digital India Initiative and prime minister's vision, potentially leading to an increase in black market activities and criminal offences, due to a 400-500% increase in the GST burden. The change may inadvertently benefit offshore gambling sites, leading to a significant tax loss for the government and exposing Indian gamers to unregulated offshore gambling websites.
The industry also fears that the change could deter foreign investment. The Ministry of Electronics and Information Technology's decision to include online gaming intermediaries in its ambit was initially well-received, signalling potential for significant FDI inflows. However, the new GST proposal on full value would debilitate potential investors, both domestic and foreign, from considering the online gaming sector in India as a viable investment destination.
In addition, the current $2.5 billion plus in investments is at stake basis this decision.
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