Unlocking the Potential: How GST clarity can boost the online gaming sector

financialexpress.com:

The online gaming industry has been one of the fastest growing sectors and contributing towards India’s economic growth by attracting investment into the country and also in terms of generating employment. India is in the phase of becoming the largest online gaming market in terms of volume of users.

The recent release of regulations for online real money games by the Ministry of Electronics and Information Technology (MeitY), aimed at regulating the sector, will further bolster investor confidence resulting in increased investment flow and expansion of the sector. These regulations have been drafted in record speed and has also been published after elaborate industry and other stakeholder consultation. One of the key aspects of the regulation is the authentication mechanism for determining whether the games are skill-based or chance-based. These steps will provide immense clarity to the stakeholders and also help in building a conducive atmosphere for growth of the industry. Similarly, clarity provided around the withholding tax provisions would help reducing undue ambiguity on the taxation guidelines.

While the government has provided substantial clarity from a regulatory and Income Tax perspective, similar steps are awaited in terms of applicability of GST on online gaming. Several players in the industry have already been subject to investigations and some of the matters are already before the higher courts on the question of tax ability and value. In this context, the setting up of Group of Ministers on deliberating the issues faced by the industry was a welcome move. However, conclusions from that GoM have been long pending. In light of the above, there are high hopes being cast on the upcoming 50th GST council