Bif: BIF sounds alarm on 28% GST on online gaming, says many players may be forced to exit

Broadband India Forum (BIF), an independent policy forum and knowledge-based think-tank feels that the Online Skill-based Gaming Sector has termed the GST Council’s decision to levy 28% GST on online gaming as harsh. The body called it a dampener for an industry that it says has a tremendous long-term potential to generate huge revenues for the national exchequer, leading to a surge in demand for 5G, increase in broadband traffic & penetration, while inculcating a renewed sense of responsibility with accountability amongst gaming intermediaries towards.

BIF sees the GST Council’s decision to impose 28% tax on online skill-based gaming as a very big setback for this flourishing sector and it would seriously hurt FDI and damage advertising revenues; and, most importantly, in a situation where 5G utilisation is critical. It said that the gaming industry which is a turbo-charger for the consumption of 5G will effectively be severely stunted. BIF further warned that the hefty tax will also give impetus for the growth of black market operators which could, in turn, pose a serious security threat to national security.
“With a $20-billion valuation, $2.5-billion revenues, and significant job creation, online skill-based gaming has been a shining beacon of innovation and investment. The government must start approaching innovation with a cross-sectoral outlook if it wants one platform to succeed through the growth of another,” BIF said in a statement.

The finance minister has said that the GST will be reviewed in 6 months. But BIF warns that considering 95% of the industry comprises small businesses, many entrepreneurs would be forced to exit the sector.
This decision could also bring foreign investments to a halt in the sector. Online Gaming is a consumer-driven industry, advertising plays a big role in its being, the advertising budget for the sector, which currently stands at $1 billion, could be significantly reduced, impacting the media and entertainment industries.
Urges ministry to reconsider the decision
BIF earnestly requests the authorities to reconsider the recommendations at the earliest in order to keep India’s online skill-based gaming industry on its path to leadership position in line with the Prime Minister’s vision of the country becoming a global AVGC (Audio Visual Gaming and Comics) powerhouse.
TV Ramachandran, President of BIF, said, “This sector, which attracted about $1.7 billion investments in 2021 and Q1 of 2022 alone, is truly one of the great attractors of foreign and domestic investments and a powerful booster of the economy. However, the proposed tax would be a very powerful deterrent to future investment and could lead to the exit of hundreds of entrepreneurs from the sector.”