Online Gaming | Will excessive taxes push the sector into oblivion?
Dhruv Garg and Hemant Kothari
Online gaming has repeatedly been endorsed as the sunrise sector. It has produced three unicorns in quick succession, and attracted over $1.6 billion in FDI in the past 18 months. But when India’s tax policy potentially recommends an increase in Goods and Services Tax (GST) of over 1,000 percent, the Sun is all but certain to set on this industry. Moreover, this tax policy may be based on a misinformed understanding of the law and the Constitution.
A Group of Ministers (GoM) recently submitted their recommendations on the method of valuation for calculating the GST for online gaming, casinos, and horse racing. According to reports, the GoM recommended that online gaming be taxed at 28 percent on the entire contest entry amount. If operationalised, this is likely to throw the $1.5 billion industry into a tailspin, thereby affecting over 50,000 direct jobs and more indirect jobs.
This post was originally published on Moneycontrol and can be accessed here.