While the online gaming platforms continue to see a steady exponential growth in India, the lack of a uniform regulatory framework to overlook the industry continues to present challenges for the operators. A new curveball for the industry has been thrown in recently, with the GST Council and Ministry of Finance bringing together Casinos, Race Courses and Online Gaming for a reconstitution of GST rate and valuation.But including online gaming, which has already been established as a game of skill by multiple court rulings in several High Courts and the Supreme Court of India, into this subset lacks logical reasoning. In this current regime post GST, the industry is taxed under HSN Code 998439 @18% on platform fee/ Gross Gaming Revenue (GGR), which industry experts feel is business viable and conducive to sustain the current growth trajectory of the Online Gaming industry."Anything additional in terms of tax implications will have detrimental impact on the growth of the industry. It is a very optimal level at this point of time, and should continue the way it is," Sameer Barde, CEO, E-Gaming Federation, said in a recent interview.Online Gaming operators that are running within the purview of India legal system have made strict guidelines to ensure there are no legal crossovers with gambling avenues. There is a strict age limit to participate on most online gaming platforms. There is also a deep-rooted need for skill and knowledge that a user needs to be financially successful on Online Gaming platforms. For eg: Fantasy Sports (an online game) users need to have skills and knowledge about the sport and the players they are including in their teams.Keeping these factors in mind, most online gaming platforms keep their average participation ticket price at a low cost, somewhere between INR 25-35, which is incomparable to unrestrained entry values in activities such as horse racing or casinos. Hence, online gaming platforms require a different regulatory and taxation regime."One of the biggest hurdles we face is around regulatory uncertainty. Games of Skill are essentially legal and can be played for real money and are protected under Section 19 of the Constitution. Unfortunately, some states, in spite of these judgments, have chosen to ban all games including Games of Skill," Sameer Barde added.There is a widespread belief among experts that the online gaming industry will face dire consequences if there are changes made in the current taxation regime. As per a recent report from EY, most industry operators have a platform fee in the range of ~ 4% - 20%.
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