29 February 2024

Trendy Texts

Business, World, Economy, Tech, Sports News

online gaming

28% GST on online gaming & Casinos: Check Out For More Information

Shares of online gaming companies including Nazara Technologies and Delta Corp plummeted in early trade on Wednesday (July 12) as the GST Council surprised the industry by imposing a standard 28% GST on online gaming, casinos, and horse racing.

Delta Corp shares opened 10% lower at 222.15, while Nazara Technologies shares cracked over 14% in early trades after the Goods and Services Tax (GST) Council imposed a 28% uniform GST on online gaming, horse racing, and casinos on the full value of bets on Tuesday (July 11).

GST Council Meet Decision

“I am pleased to report that we have reached a decision.” GST legislation will be modified. Simply put, internet gaming, horse racing, and casinos would be taxed at 28% of their face value, according to Finance Minister Nirmala Sitharaman.

The finance ministry stated that amendments to the GST law will be introduced to specify that tax will be applicable on the face value of the chips purchased in casinos, the full value of bets placed with bookmaker/totalisator in horse racing, and the full value of bets placed in online gaming.

online gaming

Furthermore, the GST on internet gaming would be applied consistently, with no distinction made between games requiring skill and those relying on chance.

Concerns were aired by industry participants. The proposal, according to Malay Kumar Shukla, secretary of the E-Gaming Federation, is “an extremely unfortunate decision because charging a 28% tax on full face value will result in a nearly 1,000% increase in taxation and prove catastrophic for the industry.”

Also read: Tata Consultancy Services shares are in spotlight ahead of Q1 earnings

GST Impact on Online Gaming Sector

According to Trendy Texts, referring to an eSports body research, the Indian online gaming industry is developing at a pace of 30% per year and is one of the fastest-growing industries within the media and entertainment sector.

As of May 2022, the country accounted for 19.2% of global game downloads. The gaming industry’s compound annual growth rate is approximately 22%. In 2021, India will have approximately 390 million internet gamers.

According to the EPWA survey, if policymakers raise the GST on online gaming, 61 out of 100 online gamers may stop playing.

The proposed changes in tax rates will increase the financial burden on the gaming business because they will be required to pay tax on those sections of the money as well, which does not contribute to revenue generation for these companies, according to the research.

Meanwhile, Nazara Tech, as reported by CNBC-TV18, stated that if implemented, the 28% GST rate will apply only to the skill-based gaming component of its business. “The skill-based gaming segment contributed 5.2 percent of revenue in FY23.” “We expect the GST rate increase to have little impact on our overall revenue,” Nazara Tech management told CNBC-TV18.