As the Goods and Services Tax (GST) council implement a 28% tax on online gaming, casinos, and horse racing. Finance Minister Nirmala Sitharama, on 11th July 2023, announce the new taxation policy, adding that tax would be levied on the full face value of transactions, which include the amount being wager or deposit for the game.
Since the announcement, industry stakeholders, which include investors, gaming companies and others, have express concerns about the impact of the ‘online gaming’ tax on businesses, industry jobs, and foreign investment.
So now, over 45 video game companies in India, representing the games industry in the country, have written to the Prime Minister’s Office, Ministry of Electronics and Information Technology, and the Ministry of Information and Broadcasting in a joint letter to address the ambiguity surrounding ‘online gaming’, drawing a clear distinction between video games and real money gaming/ fantasy sports.
The letter requests the Indian government to implement a distinct recognition of the games industry in India, and to avoid video games and e-sports from being club with real money gaming and online fantasy sports.
Signatories to the letter, which include Indian video game companies like SuperGaming, Outlier Games, GameEon Studios, and many more, have clarified that the recently announced 28% GST on online gaming does not affect video games.
“Indian Video Games Industry (value at $812 million (approx. Rs. 6,660 crore) as of 2022) are unaffect by the recent developments on the GST as these sectors continue to be tax at 18% and support by the Indian government through the plan AVGC-XR Policy,” the consortium of game companies said in a press release.
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The sign letter to PMO, MeitY and the I&B Ministry calls for a clear separation between video games and real money gaming/ fantasy sports, citing misinformation campaigns associating the entities.
“While this assertion is objectively false, due to the usage of an overly broad term like ‘Online Games’ different industries are unjustly club together, leading to widespread confusion.
This confusion fuel controversies and heat debates surrounding the imposition of 28% GST,” the letter reads.
The video game companies have thus call for categorising games that involve wagering real money as ‘iGaming‘, as is standard practice globally.
As per letter :
“To sustain and further develop our industry's growth trajectory and economic contributions, we emphasise the critical need for clear differentiation and categorization of Video Games as separate entities from Real Money Games and Fantasy Sports (iGaming) as it is done across the world,”.
As per press release :
“What is being called 'Online Games/Online Gaming' in India is known as ‘iGaming' internationally. It's also pertinent to highlight that the global games market revenue of $184 Billion does not include revenue from RMGs and Fantasy Sports,”.
The letter also maintains that the umbrella term of ‘online gaming’ and consequently the association with real money games has left the Indian video games industry battling ‘unfair social stigma’ and ‘cloud investor perception’.
The game companies also highlight the need for a distinction from the perspective of gamers.
And video games do not come under the ambit of the new taxation policy, 28% GST will be levied on fantasy cricket apps that have gain widespread popularity in the country in recent years, among many other fantasy and real-money games.
These apps have also spark concerns of addiction among players, and could lead to financial harm with real money wagering involve.
