The Indian online gaming industry, which is valued at over $3.5 billion, urged the government on Monday to reconsider the imposition of a 28% GST on the 'Contest Entry Amount' to protect the domestic industry.
The Skill Online Games Institute contends that the elevated tax rate is suppressing local companies and obstructing the industry's capacity for substantial expansion.
"The shift from 18% on gross gaming revenue to CEA in October last is not just a financial burden on legitimate domestic platforms but also unintentionally bolstered illegal offshore betting and gambling activities," SOGI Founder President Amrit Kiran Singh said.
"There is a need for the re-assessment of GST policy to curb the unintended consequences of fostering illegal gambling and to support the growth of the domestic online gaming industry," he said.
Singh highlighted concerns that the high tax rate is driving Indian companies out of business, while foreign companies, particularly those from China where there is no such tax, are gaining a competitive edge.
"The government had agreed to review the GST rates on online gaming post-election and so we want it should be done after a complete study, rather than looking into revenue spurt it has given due to the shift," Singh said.
He urged the government that this review be done with a comprehensive understanding of the Indian and global online gaming landscape.
Singh also requested the government to consider the taxation models of other countries like the US, the UK, and China.
SOGI is also collaborating with the University of Oxford to study global regulations and tax structures for online gaming.
SOGI emphasises the industry's potential for job creation and economic growth. The sector currently employs over 2 lakh people and has grown at a rapid pace of 35% CAGR in the last five years.
With an appropriate regulatory framework, SOGI is confident that the industry has the potential to expand fivefold or even sixfold shortly.
(With text inputs from PTI)
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