Delhi Finance Minister Urges GST Council to Reconsider 28% Tax on Online Gaming

The 51^st meeting of the GST (Goods and Service Tax) Council was held today on 2^nd August after being rescheduled from 27^th July. One of the things discussed by Delhi’s Finance Minister, Atishi Marlena Singh, was the reconsideration of the 28% tax imposed on online gaming.

In one of her public statements, Atishi said that the Government of Delhi (Aam Aadmi Party) is clear that promoting start-ups is the only way our (India’s) economy will grow.

Atishi believes that ‘Online Games’ are different from ‘Gambling and Betting Games’ and hence it is wrong to levy a 28% tax on them. Further adding that the implication of this tax will hinder and discourage foreign investors from funding online gaming start-ups.

Finance Minister of Delhi Requests GST Council to Reconsider 28% Tax on Online Gaming

Before moving ahead it is important to know what the term ‘Online Gaming’ means according to the Indian Government. Well, simply put it takes into consideration all forms of online gaming activities like real money games, fantasy leagues, gambling, and regular video games.

On 11^th July, the GST Council during its 50^th meeting decided to levy a uniform 28% tax on full face value for online gaming, casinos, and horse racing.

However, it was indicated that the new taxation measures were specifically applicable to online games that encouraged wagering, therefore regular games like Dota 2, Fortnite, Valorant, BGMI, and more, irrespective of their platform PC, console, or mobile would not be affected.

Going back to what Delhi’s Finance Minister had to say about the new taxation rules, Atishi spoke in favor of Online Games saying that people of all ages like to play games like Chess, Carrom, Car Racing, and other such titles.

“So if this start-up industry which has brought in millions of dollars of investment into this country, which gives employment to thousands of people, if a 28% GST is imposed on it then this entire industry will collapse and all these jobs will go,” said Atishi in a statement, before heading into the 51^st meeting of the GST Council.

She emphasized that online gaming, the fastest-growing sector, if the government levies such a high tax on it, then why would someone bother investing in a start-up?

Atishi even met with several representatives from the online gaming industry to understand their concerns and learned that the format in which the government is thinking of levying 28% tax is one of the main stress points.

“The 28% tax will be implemented on every game. If two people play Chess for 10 minutes then 28% tax will be charged for it, If two people play Carrom for 10 minutes then 28% tax will be charged for it, If two people play Car Racing for 10 minutes then 28% tax will be charged for it,” said Atishi, while explaining the main problem faced by online industry stakeholders.

Atishi also highlighted that the implementation of this new taxation measure could result in the loss of about 50,000 jobs. More than that it would discourage future investors from funding Indian start-ups as they might worry about a sudden change in taxation and other rules.