Domestic online gaming industry seeks GST adjustment to help it thrive

The Indian online gaming industry urged the government to reconsider levying 28% GST on Contest Entry Amount' (CEA) in order to save the domestic industry.

The Skill Online Games Institute (SOGI) argues that this high tax rate is stifling domestic companies and hindering the industry's potential for significant growth.

"The shift from 18% on gross gaming revenue to CEA in October last is not just a financial burden on legitimate domestic platforms but also unintentionally bolstered illegal offshore betting and gambling activities," SOGI Founder President Amrit Kiran Singh said.

"There is a need for the re-assessment of GST policy to curve the unintended consequences of fostering illegal gambling and to support the growth of the domestic online gaming industry," he said.

Singh highlighted concerns that the high tax rate is driving Indian companies out of business, while foreign companies, particularly those from China where there is no such tax, are gaining a competitive edge.

"The government had agreed to review the GST rates on online gaming post-election and so we want it to be done after a complete study rather than looking into revenue spurt it has given due to the shift," Singh said.

He urged the government that this review be done with a comprehensive understanding of the Indian and global online gaming landscape.

Singh also requested the government to consider the taxation models of other countries like the US, the UK, and China.

SOGI is also collaborating with the University of Oxford to study global regulations and tax structures for online gaming.

SOGI emphasizes the industry's potential for job creation and economic growth. The sector currently employs over two lakh people and has grown at a rapid pace of 35% CAGR in the last five years.

With the right regulatory framework, SOGI believes the industry can grow five to sixfold in the near future.