Budget 2025 expectations: Online gaming industry asks – ‘Where is the GST review?
Even after waiting 15 months for the promised “review” on the goods and services tax hike — from 18% on service fee/gross gaming revenue to 28% on deposits – the gaming sector is confused. Today, it watches with deep distress as its business dwindles and domestic gamers flee to offshore, illegitimate gambling and betting platforms, often advertising themselves as “No-GST.”
When the 50th GST Council in July 2023, announced the hike, to be implemented from October 1, 2023, the industry was shocked and raised an outcry, prompting the Finance Minister, Nirmala Sitharaman, to promise a “review” of the increased rates after a few months of implementation. Despite the passage of 15 months, and witnessing the adverse impact on the industry, no such “review” has been forthcoming.
The huge GST increase was announced by the government with the objective of curbing negative reports of the industry such as “addiction” among young Indians and to increase government revenues from online games. Simultaneously, a review of the said policy was to be provided post studying the impact after a period. Fifteen months have passed since the policy was introduced and it has only exacerbated the migration from Indian platforms to offshore ones, without providing any protection from things like addiction, whatsoever.
The sustainability issue
The government announced that the revenues have gone up five times, a 412% jump to Rs.6,909 crore in six months on increased tax rate– but the real question that remains to be answered is whether this increase is sustainable.
The answer is a resounding no because even after raising the tax rate by around 1000%, the revenue has only increased five times. After all, the offshore betting and gambling platforms neither pay GST nor provide any personal protection to customers like frauds yet continue to attract Indian gamers from domestic platforms because of the exorbitant rate on one side and “no GST” on offshore platforms.
