Govt may weigh single tax for online gaming

The government may consider a single tax rate for online gaming as two different rates of 18% and 28%—based on whether they are games of skill or chance—are prone to misuse and litigation because of overlap, two people aware of the development said.

A final decision on this matter will be taken by the GST Council, the apex decision-making body on matters of the indirect tax, they said on condition of anonymity. The council, a federal body, is chaired by the Union finance minister and has representations of state finance ministers.

The GST Council constituted a group of ministers (GoM) in May to address issues related to the online gaming sector for taxation purposes.

“The GoM is expected to submit its report to the council next month. The council may discuss all issues related to online gaming and take a considered view,” one of the people said. The GoM is to ascertain whether GST should be applicable only on the amount retained by the platform or also levied on the prize money.

The second person said it is often difficult to ascertain whether a game is purely one of skill or chance. “For example, rummy is a game of skill, but distribution of cards to players is nothing but chance. Secondly, unlike physical casinos, where the age of a player can be easily verified, in online gaming platforms, there is no effective way to check entry of kids as young as 13, which could be detrimental for the society. Hence, online gaming should be treated like lottery, a sin product, and attract the highest rate of 28%.”

All India Gaming Federation (AIGF) CEO Roland Landers said the association has recommended that the Centre continue with the current GSt at 18%.