28% GST on Online Gaming: Industry Feel Esport Will Take A Hit, Call The Decision Unjustified

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New Delhi, July 12: The GST Council on Tuesday (July 11) decided to levy the maximum 28 per cent tax on the full face value of bets in online gaming, casinos and horse racing, impacting Esport, which is a game of skill rather than chance or luck.

Giving details of the decisions taken at the 50th Council meeting, Union finance minister Nirmala Sitharaman said the decision to levy maximum tax on online gaming and casinos was not intended to kill the industry but considering the "moral question" that it cannot be taxed at par with essential commodities.

The tax on online gaming companies would be imposed without making any differentiation based on whether the games required skill or were based on chance. Officials said the decision was taken to discourage young people from getting addicted to online gaming. Some state ministers raised concerns over how this addiction had become a menace.

However, representatives of the online gaming community and Esports, felt it was unjustified to include online gaming that also includes Espor in the same category of gambling and horse racing.

"The decision of the GST council to impose a 28% tax will have a significant impact on the online gaming industry, which unfortunately includes the Esports community," said Mr. Sagar Nair, Co-founder, and CEO of Qlan, the Gamers' Social Network.

"While we understand that the government needs to impose such measures on casinos, horse racing, and gambling, the higher tax rate is not justified for the competitive gaming community.

"It can discourage new players from entering the market as their hard-earned earnings generated through their efforts just like mainstream athletes will be taxed on the same level as those involved in gambling and other such practices.

"For the Esports industry to continue its unprecedented growth and recognition on the international stage, it is vital for the government to treat Esports as a separate category with reasonable tax rates that would support the development of the sector."

"Yet again, esports being included in the same domain as online gaming, horse racing, and casino, has put our industry at a major disadvantage," said Mr. Rohit Agarwal, Founder & Director, Alpha Zegus, the next-gen marketing agency specializing in the domains of gaming & lifestyle.

"While the government might have fair reasons to impose higher GST on horse racing and casino winnings, imposing the same rules on an industry like esports doesn't seem fair.

"Esports does not only have a 'win or lose' situation basis luck but has a very big element of skill that determines the outcome of the game. This is not what I expected, and our fight to separate esports from other labels still continues."