Increase in the GST: Online Games in India are Likely to Cost More Money

Regardless of whether an online game is a game of skill or chance, the state finance ministers' panel is expected to suggest a GST rate of 28% and may leave the GST Council with the ultimate say on the contentious valuation issue, according to sources.

How was the GST for online games proposed?

Conrad Sangma, the chief minister of Meghalaya, presided over a virtual meeting of the Group of Ministers on Tuesday to finalise their report on the taxation of online gambling, casinos, and horse racing, which had been in the works for a long time.

The majority of state ministers in the GoM, according to the sources, believe that the Goods and Services Tax (GST) on online gambling should be increased to 28%.

What is the current GST rate for online gambling?

The current GST rate for online gambling is 18%. The fee that online gaming platforms charge is used to calculate the tax.

According to the sources, there won't be any further discussions at the GoM level, and the report will now be presented to the GST Council for review. The supreme decision-making body for GST-related issues is the GST Council, which is presided over by the Union Finance Minister and includes her state equivalents.

What is the next GST recommendation for online gaming?

The GoM had recommended a 28% GST on the absolute value of the consideration.  The Council requested the GoM to reevaluate its definition, nevertheless.

According to the sources, there won't be any further discussions at the GoM level, and the report will now be presented to the GST Council for review. The supreme decision-making body for GST-related issues is the GST Council, which is presided over by the Union Finance Minister and includes her state equivalents. The GoM then heard the Attorney General's opinions and spoke with industry stakeholders in the online gaming sector.

During the Covid lockout, online gaming saw a surge, significantly increasing Indian users. According to KPMG research, the online gaming industry will rise from Rs 13,600 crore in 2021 to Rs 29,000 crore by 2024–2025.