CAIT’s Praveen Khandelwal writes concerns regarding new GST on online gaming

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Secretary General of Confederation of All India Traders (CAIT), Praveen Khandelwal, has addressed a letter to the Prime Minister on behalf of CAIT listing the catastrophic implications of changes to GST on online gaming made by the GST council.

The letter focused on the points previously mentioned by the online gaming companies in their open letter to the government. Notably, the letter sought reconsideration of the decision by the GST council to increase the tax rate to 28% on full face value.

The @GST_Council in a shocking decision held that #OnlineGaming will be taxed at par with lottery & gambling, which is at 28% of the full value of deposits instead of 28% of the margin that they charge. Not only has this invited criticism from national & foreign media pic.twitter.com/6n1yKR6aLe

— Praveen Khandelwal (@praveendel) July 17, 2023

Khandelwal wrote that the tax will severely halter the revenue for gaming startups. He also pointed out that the industry will become unviable and lead to several lay-offs, thereby leaving many people unemployed.

He further mentioned the illegal offshore betting websites and how they can profit from the suffering from online gaming companies. These offshore websites are not bound by any tax laws and will act as alternative for the users. This will probably impact RMG companies’ revenue, as there might be a shift in platform for the audience.

The letter further cited that the council’s decision was not in line with the Ministry of Electronics and Information Technology’s (MeitY) plan to regulate online gaming in India as they recently announced new amendments to online gaming rules.

A copy of the same was also sent to Finance Minister Nirmala Sitharaman and MoS for Electronics and Information Technology Rajeev Chandrasekhar, requesting a reconsideration on the topic.

Stakeholders in the online gaming sector are also seeking a meeting with top government officials in order to try and convince them to reconsider the decision on new tax policy. Currently, there is no guarantee if their efforts will work as the decision was taken unanimously by all states.

Industry members also said that if the Govt’s decision remains unchanged, several small startups will either have to shut down or look for other options due to increased tax burden.

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