'Will go back to GST Council...': MoS IT Rajeev Chandrasekhar on 28% tax on online gaming

Amid backlash from the online gaming industry over the imposition of 28 per cent GST, Minister of State for IT Rajeev Chandrasekhar on Monday said he will request the tax-deciding body to reconsider the levy. The online gaming industry is upset with the GST Council's move, with some claiming that the high tax will kill the sector.

Chandrasekhar today said that the country is in the nascent stage of creating a sustainable and permissible online gaming framework. "So we will do that. We will go back to the GST Council and request their consideration on the facts of the new regulatory framework," he said while speaking at a CNN-News18 event.

The minister said that some people are saying it's anti-constitutional but he said it's totally wrong. "It is better to slowly progress and evolve these frameworks that are sustainable than doing things in a hurry just because you are reacting to angry industry and angry start-up and then create downstream mistakes," Chandrasekhar said.

In the last meeting held on July 11, the GST Council decided to impose a maximum 28 per cent tax on the full face value of bets in online gaming, casinos, and horse racing. 

Soon after the tax was announced, All India Gaming Federation CEO Roland Landers called it a 'disastrous decision' for start-ups, ease of doing business, investments, and the online gaming industry. Landers also shared a tweet by former BharatPe founder Ashneer Grover who said the high tax will "murder" the industry.

"RIP - Real money gaming industry in India. If the govt is thinking people will put in ₹100 to play on ₹72 pot entry (28% Gross GST); and if they win ₹54 (after platform fees)- they will pay 30% TDS on that - for which they will get free swimming pool in their living room come the first monsoon - not happening," Grover, who recently founded a fantasy gaming firm CricPe, said in a tweet. 

"It was good fun being part of the fantasy gaming industry - which stands murdered now. $10 Bn down the drain in this monsoon. Time for startups Founders to enter politics and be represented - or this is going to be spate industry after industry," he said. 

However, Finance Minister Nirmala Sitharaman said the decision to impose a 28 per cent on online gaming was not intended to kill the industry but considering the "moral question" that it cannot be taxed at par with essential commodities.

"We are purely looking at that what is being taxed because it creates value, profit is being made...based on the wager people win. Today's decision looks at what is to be taxed and what not," Sitharaman said. She also said that the IT ministry was looking at the regulatory aspect of online gaming, while the GST Council had taken the decision solely for tax purposes.

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. 

Sitharaman said it was impractical to meet the industry demand for a levy of tax on platform fees as it was impossible for tax authorities to go after every player and find where all the bets have been placed. "It is impossible to pierce the veil of opacity," she said, adding that every state was in agreement that online gaming and betting should be taxed at the highest rate on full face value.