28% GST levied on online gaming sparks outrage in the industry

The GST Council has decided to go ahead with levying a 28 per cent GST on online gaming, horse racing, and casinos. The announcement has sparked an instant outrage from the online gaming industry. The decision, taken at the 50th meeting of the GST Council after careful consideration, is believed to help regulate the online gaming industry, while also ensuring that it is fair and transparent. 

The decision to levy GST on online gaming has been met with mixed reactions. Some people have welcomed the decision, saying that it will help to level the playing field between online gaming companies and traditional gaming companies. Others have criticized the decision, saying that it will increase the cost of online gaming for consumers and discourage the development of the online gaming industry in India. 

"The GST Council's decision to levy a 28% GST on online games without distinguishing between games of skill and chance poses a severe threat to the growth and sustainability of the online gaming industry in India. These regressive measures disregards years of established legal precedents and unjustly associates online gaming with gambling activities and will have a negative impact on the growth of the real-money gaming segment, which accounted for 77% of India's gaming sector revenues in 2022,” read a quote on behalf of - Management of Kick Games Studios Pvt Ltd. 

“While this has come as quite a shock for the industry, however, it remains to be seen as to how and on what basis, this policy shift is to be incorporated in the law. This will require an amendment to the GST Act, which amendment, shall have to be tested on the touchstone of the Constitution. It’s to be seen whether it would survive a constitutional challenge, especially since the Supreme Court and at least two high courts have provided a distinct classification between games of skill and chance. To bundle everything under one head, is harsh and unsustainable,” said Abhishek Malhotra (Managing Partner TMT Law Practice).