28% GST: Online real-money gaming companies seek meeting with govt officials

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In a last-ditch effort to stop the implementation of 28% GST rate on full face value amount for online games, executives from top real money gaming companies have now sought a meeting with government officials this week.

The companies believe that with the new GST rate, the size of the real money gaming industry will significantly diminish. Reports have indicated that the industry is currently estimated to be around $3 billion and expected to grow at a CAGR of 27% in the next five years.

According to The Economic Times, the companies are seeking a meeting with revenue secretary Sanjay Malhotra and MoS MeitY Rajeev Chandrasekhar.

Many of the companies have already argued that in case the new GST rate is implemented, several entities will either have to shut down or “look for other options”.

Malhotra has already stated during an interview that while the companies can ask for reconsideration, he believes that the GST Council is united in its decision and their efforts may be futile.

The decision regarding the GST rate implementation was passed with a unanimous vote. The states also believe that it will increase the revenue collection. In the last year, the GST department collected around Rs 1700 crore as tax revenue from the industry which was only 2% of their turnover. With the new tax policy, they expect to collect up to ten times that amount.

Over 100 gaming companies have addressed an open letter to the government, listing the potential harms of 28% GST rate application on the full face value amount. They further asked for a reconsideration but also said they would support the decision if they wish to implement it, reiterating that it should be levied on gross gaming revenue (GGR) instead.

A group of gamers also voiced their concerns over the decision. These gamers included players from real money gaming, AAA games, e-sports, and casual online games. Malhotra, during his interview, has also clarified that the tax is only applicable to real money games, so as such, AAA games, e-sports, and casual online games are not really affected it appears.

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