Context: 

At the 50th GST Council meeting, it was decided that online gaming would be taxed at 28% on the full-face value of the placed bets. But recently, it was convened afresh to revisit the matter. 

Online Gaming:

• The Ministry of Electronics and Information Technology (MeitY) in its draft regulation has defined online game “as a game that is offered on the Internet and is accessible by a user through a computer resource or an intermediary.”
• These online gaming platforms can be fantasy, e-sports, or skill-based online gaming platforms.

Status of Online Gaming in India:

• India’s gaming industry is expected to become a $5 billion industry by 2025, growing at a compounded annual growth rate of 28-30 per cent.
• Some of the prominent companies in the sector are Games 24*7 which also operates Rummy Circle, Dream 11, MPL, etc.

About Gross Gaming Revenue (GGR):

• An Entry Fee: Gaming platforms charge an entry fee from the user to allow them to participate in a particular game.
• Deduction of Amount: The platform operator deducts a certain amount of entry fee to run the game and the overall platform, known as the Gross Gaming Revenue (GGR). The rest is transferred to the prize pool.
• Current Charges: Currently, online gaming platforms pay the government a GST of 18 per cent levied on the GGR. 
  • Besides this, a TDS (Tax Deducted at Source) of 30 percent is deducted on the winnings.

Why is the Revisiting on the matter?

• Expensive for Players: The high tax rate will make it more expensive for players to participate in online gaming.
• Raising Concerns by Industries: By an outcry from industry and a pressure from the Electronics and IT Ministry that is steering the e-gaming policy. 
• Setback for Sunrise Sector: Online gaming players had termed it a death knell for the sunrise sector with billions of dollars in investments and thousands of jobs at stake, and stressed the levy is not in sync with global norms that tax the gross gaming revenue. 
  • Sunrise Sector: A sector that is new yet shows promise of a quick boom. These are frequently characterized by rapid growth rates, lots of new businesses, and plenty of venture capital financing.
  • Examples: Hydrogen fuel production, petrochemical industry, food processing industry, space tourism, etc.
• Not a Firm Decision by the Council itself: The Council’s promise of a review of the tax six months after its implementation belies a lack of conviction in the resolution since, it is no one’s case that the GST Council should only take unanimous decisions, the need is only for a majority vote. 

Conclusion: 

Without no any doubt, it is the duty of every legal system to take care of the needs of its citizens even by molding or amending its own already taken decisions. But it shouldn’t be done so easily.
Hence, the Council should not give the impression that it can be swayed so easily by representations from the industry or demands of individual States.

News Source: The Hindu

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