GST Council’s decision on online gaming will hinder $1 trillion digital economy goal: Karnataka IT minister

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Karnataka Information Technology and Bio Technology minister Priyank Kharge opposed the decision of the GST Council to impose 28% tax rate on full face value amount on online gaming.

Talking about the impact, the IT minister said that the decision might potentially hinder India’s goal to become a US$ 1 trillion digital economy by 2025. Reports show that the country has seen a massive growth rate in the gaming sector which could potentially reduce now.

“Although I personally oppose all forms of gambling, implementing a flat 28 percent GST on the gaming industry has significant negative implications. The tax applies uniformly, regardless of whether a game relies on skill or chance,” said Kharge today as quoted by Moneycontrol.

He further stated that the gaming ecosystem would see even fewer startups moving forward with the current ones struggling due to lack of foreign direct investments.

The 28% tax rate on the full face value amount is expected to discourage many gamers from playing online games due to increased entry fees with diminishing rewards. This in turn would lead to significant job losses.

Increased tax burden on the industry might mean users would shift to illegal offshore websites and suffer heavy financial losses due to unregulated and shady practices of these companies. Further, they might push people to borrow loans from illegal loan apps, too.

Meanwhile, Goa transport minister Mauvin Godinho also commented on the matter claiming that the new tax criteria will be a negative for casinos in his state. The minister added that the state with write to the GST Council for reconsideration of the decision.

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