Video Games taxed at 28 per cent: A need for clarification and demarcation

Making sense of online games, games with elements of gambling, and fantasy sport.

Hyderabad: The national discourse surrounding video games in the last fortnight has been centered around the government’s decision to tax all online gaming activities at 28 per cent through GST.

As industry experts and gamers across the country debate how this blanket implementation would affect the country’s nascent game development industry and its 500 million gamers, over 45 Indian video game companies have written to the PMO, MeiTY, and MIB to seek a nuanced response on the issue.

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The leaders of said companies point out that the new GST measure at 28 per cent doesn’t apply to video games as they are classified through the government’s AVGC-XR Policy and as such, are already taxed at 18 per cent.

The ongoing national discourse, however, uses the term ‘online gaming’ to signify video games, games with elements of gambling (real money games like Rummy Circle, Poker), and fantasy sport as a collective.

The letter to the PMO and the ministries that is signed by more than 45 Indian video game companies, requests the need to clarify the distinction between video games, real money games, and fantasy sport. In most countries, games with gambling elements and fantasy are often collectively called “iGaming”, a distinction that has been overlooked by the current GST measure and has led to unfair social stigma against the country’s video game industry.

The higher GST liability and the use of the vague term ‘online gaming’ has also made it difficult for investors and stakeholders of the video game industry to support expansion and development of new games as both their judgments and decision making are hampered by the ongoing ambiguity in the sector.

This challenge is a predictable outcome of the online gaming draft bill which also overlooked this distinction. It is paramount that the country’s executive distinguish between video games that are designed as sites of play and leisure – which in essence perform similar roles as the country’s film, television and OTT industries – and iGaming businesses which can be likened to conventional places like casinos and horse tracks.

In such a context, the term ‘online gaming’ on its own means nothing because most video games and iGaming platforms today are live services and thus, are real time platforms that are inherently linked to the internet. To govern a game like Raji or SuperGaming’s upcoming battle royale Indus on par with platforms like Dream11 or Rummy Circle or Blackjack wouldn’t just be comparing apples and oranges, but would also be a disservice to the country’s 500 million gaming population.

Finally, the coming together of the country’s video game companies augurs well as this would allow the industry to present a unified front in the ongoing public consultation/deliberation processes for the proposed online gaming bill.