Rajeev Chandrasekhar to approach GST Council for reconsideration of 28% levy on online real-money gaming

India's real-money gaming industry witnessed significant growth in 2022, accounting for 77 percent of the country's gaming sector revenues, amounting to Rs 13,500 crore, as per a recent FICCI-EY report. However, the industry faced challenges when the GST Council imposed a 28 percent GST on the full value of money paid by users to play skill-based games, without distinguishing between games of skill and chance. Gaming platforms previously paid an 18 percent GST on platform fees.

In response to industry concerns, Rajeev Chandrasekhar, the Union Minister of State for Electronics and Information Technology, expressed intentions to approach the GST council, seeking consideration of a new regulatory framework after its implementation. In April, the Ministry of Electronics and Information Technology (MeitY) introduced gaming-related amendments to the IT Act 2021, allowing multiple self-regulatory organizations (SROs) to determine the permissibility of real-money games involving money transfers in India.

The decision to levy the 28 percent GST came after years of deliberation, taking industry executives and associations by surprise. Over 130 real-money gaming startup founders, CEOs, and industry associations signed an open letter requesting the government to reconsider the GST imposition, citing potential harm to the industry and job losses.

Prominent companies such as Gameskraft, Nazara Technologies, Mobile Premier League, WinZO, Adda52, Head Digital Works (A23), CrickPe, and industry associations like All India Gaming Federation, E-Gaming Federation, and Federation of Indian Fantasy Sports joined the plea.

The tax rates imposed on real-money gaming do not apply to free-to-play and paid video games in India, as they already include an 18 percent GST rate on app sales through Google Play and Apple App Store.

Rajeev Chandrasekhar clarified during a CNN-News18 Town Hall that the GST Council represents all state governments and operates as a federal organization. He defended the decision, emphasizing that the process of creating a regulatory framework for online gaming began in January 2023.

While acknowledging industry concerns, Chandrasekhar emphasized the importance of evolving sustainable frameworks over time rather than rushing decisions. He cited the government's thorough consultation with stakeholders before establishing online gaming rules and laws.

The FICCI-EY report predicts further growth for the real-money gaming segment, estimating revenues to reach Rs 16,700 crore in 2023 and Rs 23,100 crore in 2025.