Industry hails decision to separate gaming from gambling, horse racing

The Group of Ministers (GoM) set up in May to review Goods and Services Tax (GST) on online gaming, gambling, and horse racing, on Monday, decided that gaming would not be clubbed with gambling, and horse racing. Industry experts have hailed the decision. 

The GoM has also decided to consult the industry and legal experts before submitting their report, a report by Mint stated. It is now aiming to impose a 28 per cent GST on the gross gaming value (GGV).  

In July, the GST Council announced a 28 per cent tax on the industry which experts and companies largely agreed to. Currently, an 18 per cent tax is applicable on the gross gaming revenue (GGR). 

In online gaming, the players pool their money which is then used to pay out the winnings. GRR is the difference between the total deposits and the winnings. GGV is the total deposits or the pool at the start of the contest. 

The council had, however, received a backlash from the experts from the gaming industry for clubbing it with gambling. Experts had cited several judgements stating that gaming was a game of skill and not gambling, the report added. 

“GoM recognizing the constitutional and legal difference and nuances of online games are very promising," Roland Landers, chief executive of All India Gaming Federation (AIGF), told Mint. He further added that the industry is hopeful that GoM will soon come at a "progressive and constitutionally sound recommendation". 

"They all have different economics, operating procedures, and profit margins. It only makes sense that they are taxed as per their standards," Rohit Agarwal, founder, and director, of Alpha Zegus said on keeping the gaming industry separate from gambling, and horse racing.

In India, gaming industry is expected to become a $5 billion industry by 2025, according to a report by BCG and Sequoia India.