Game developers ask Centre for clear distinction from real money games

About 50 video game developers have petitioned the government to clarify the policy distinctions between video games and real-money gaming and fantasy sports companies, The Economic Times (ET) reported on Thursday.

In a joint letter, developers, including Outlier Games, Dot9 Games, Lucid Labs, Newgen Gaming and SuperGaming, stated that media campaigns by the real money gaming industry "project a homogenous image and suggest that the entire games industry of India is adversely affected" by the proposed 28 per cent goods and service tax (GST) on online gaming.

The letter, sent to the Prime Minister's Office (PMO) and the ministries of electronics & information technology (MeitY) and information & broadcasting, said, "Globally, irrespective of skill or chance, a clear distinction is drawn between games involving wagering (categorised as 'iGaming') and games without wagering (categorised as 'video games'). Unfortunately, in India, these mutually exclusive categories have been consolidated under the common umbrella of 'online games'."

On July 11, the Goods and Services Tax (GST) Council decided to impose a 28 per cent tax on the turnover of online gaming companies, horse racing and casinos. The panel, headed by the Union finance minister and comprising representatives of all states and UTs, decided on the tax rate based on the recommendation of a group of ministers that looked at taxing casinos, horse racing and online gaming. The tax on online gaming firms would be imposed without making any distinction based on whether the games required skill or were based on chance. The council exempted those games that are played without stakes, which will attract a tax rate of 18 per cent.

A government official said that the GST Council would meet on August 2 to decide if the tax should be imposed only once on the total funds deposited to play an online game or each time a bet is placed - something the gaming industry fears will lead to repeated taxation.

Since Union Finance Minister Nirmala Sitharaman announced the plan for the tax on July 11, the online gaming industry has asked the government to review the decision, which they say will increase the tax burden on both companies and consumers.