A 28% Tax Will Wipe Out The Online Gaming Industry And Trigger Users To Move Away From Online Games.

Do you play fantasy cricket online? Then this is for you! Fantasy sports India is poised to go through a sea change. It will become more expensive with the recent GST on online gaming. The impending 28% tax levied on online gaming may not be as appalling as we perceive it to be.

Indians have withstood things like this earlier and will continue to do so. Beyond family and self-wellbeing, nothing is more meaningful to an average Indian under the sun. It is a federal decision, and until online fantasy sports companies move court, nothing will change much.

Online gaming, in its nascent stage in India, is poised to take off. But with the new 28% of GST, it is nipped in the bud. The USA and China still dominate the online gaming industry, with a global market share of over 90% of online gaming. The tax on online games in China and the USA is about 10%. Considering the competition, India does not stand any chance.

Difference between the 30% TDS on winnings and a 28% GST

This 28% tax (GST) differs from a 30% tax deducted at source (TDS) on winnings (profits) from online games. It stems from the precise difference between the income tax and the GST.

It is a double-edged sword for a user, considering that the companies will transfer the burden of GST to the consumer. A user puts in Rs 100 to play on a Rs 72 pot entry after deducting the 28% GST, and he wins Rs 54 after the platform entry fee. He has to pay 30% TDS. If he pays a total tax of 58%, it is not a done deal for the user.

Announcement of the GST on online games

The GST (Goods and Services Tax) Council has announced that bets placed on online gaming, horse racing, and casinos will now levy a 28% tax. The date to apply the 28% GST on online gaming will take effect after they amend the GST Law. The finance minister, Nirmala Sitharaman, stated this after the 50th CST Council meeting.

Taxation on the moral question

The government does not intend to levy this GST to wipe out the online gaming industry. It is a "moral question" that they cannot tax online gaming on par with essential commodities.

Essentiality of the commodities

We all agree that games are not essential, although our government advises people to play games to stay fit. By any standard in the world, health is a necessary commodity. Games are an alternative to workouts considered by many, including doctors, just like dancing. It involves massaging and greasing our internal organs and faculties. 

In online games, the players use faculties like brain power, cognitive skills, and decision-making. They have to research and study to gather knowledge. It boosts the development of our mental health. After all this, according to the government's view, mental health is not essential, and there is no doubt about that. We can live without games or entertainment, as these are not essential. 

Why do they not consider putting the GST on childbirth? Considering India is moving at a scorching pace to touch the 1.5-billion mark (at 1.42 billion already). I know it is farfetched, but I just had a wild thought.