Electronic tax

The online gambling industry opposes a 28% tax bracket; requires 18% GST

The online gambling industry has made a plea to the government against increasing GST rates to protect the industry from shrinkage. Several industry pundits have called for the 18% GST on online gambling to be maintained, objecting to the industry’s bludgeoning into the 28% bracket as well as racing, gambling and gambling. Paris. The move was taken after the GST Board mandated Group of Ministers (GoM) met to consider issues relating to the GST regime covering online gambling, casinos and racetracks. According to the data, the online gaming industry has the potential to generate revenue and employment opportunities in the near future, and a proposal to levy GST on 28% of entry fees and an additional 115% instead platform fees / gross gaming revenue (GGR) will render the industry commercially unviable.

The tax structures of the international online gambling industry in countries such as the US, UK, Australia and Germany highlight how they levy a tax on the GGR at a rate between 15 and 20%, said Gopal Jain, Senior Advocate at the Supreme Court of India: “We have seen internationally that markets that started taxing the kitty instead of the GGR have had to come back to taxation only at the GGR as this leads to non-compliance, revenue leakage and gray markets,” he added.

Advocating the need to levy a tax solely on the GGR, the online gambling industry argued that taxing the GGR instead of the prize pool has proven to increase tax revenue in the long run. And with international learnings also indicating the same, several recommendations were sent to the GST Board, ahead of the scheduled meeting, to plug revenue leakages by preventing the company from moving to the gray market and discouraging non- respect for a widespread worldwide practice.

For Rameesh Kailasam, CEO of IndiaTech.Org, the potential of India’s online gaming industry should be rightly harnessed. “Skill games should ideally be taxed at 18% on the platform fee. The GoM should ideally take a positive view and recommend maintaining the current practice of viewing platform/GGR fees as the value of the offer. Since online skill-based games are not gambling, betting or betting, clarification needs to be released to resolve disputes and bring relief to the industry,” he said. declared.

“A higher tax burden will make the industry unsustainable, and online gaming platforms have repeatedly asked the government not to treat skill-based online games the same as gambling. while sharing a concrete example of how different and rational tax treatment of online skill-based gaming can help eliminate non-compliance, revenue leakage and gray markets,” S Krishnan pointed out, lawyer, sports law and taxation.

Experts believe the industry will suffer significantly if the current tax regime is changed. Moreover, transactions on online gaming platforms are 100% digital and they make a significant contribution to “digital India”. Moreover, the online gaming industry is believed to play a role in changing the start-up spirit in the country and further boosting the Indian AVGC sector. Additionally, if the uncertainty in policy-making and taxation of skill-based online games is resolved, the industry can attract increased FDI and growth, thereby enhancing consumer interest and tax revenues. This can help the government in the long run and make India a dominant global force in the AVGC, experts say.

According to a 2021 report by BCG and Sequoia on India’s mobile gaming market, the Indian online gaming industry is expected to triple to approximately $5 billion in market opportunity by 2025. Gaming is a sector 1.8 billion emerging in India and is still relatively small (1% of global), but it is growing (38% CAGR). According to the recent FIFS-Deloitte report, fantasy sports has the potential to attract Rs 15,000 crore in FDI over the next three years.

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