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India’s online gaming market is on the rise. But GST also applies to the Online Gaming Sector. So, GST on online gaming is something that everyone, including taxpayers, online gamers, and gaming businesses, needs to understand. This article explains the main ideas behind GST and how it affects the online gaming industry.
How GST applies on online gaming sector
Under the GST Act, gaming platforms in India are now considered “suppliers” of services and must pay GST through GST Return Filing.
When players pay platforms to use their services, their payments are often split between a prize pool (escrow account) and service fees (platform fees) paid by the platforms themselves (gross gaming revenue or GGR).
When someone wins a game, the prize money is sent directly to their bank accounts.
Under the GST Regime, the GGR is taxed at an 18% rate right now. So, businesses in the Online Gaming Sector need to get GST Registration and then collect taxes at the 18% GST Rate.
Latest updates for GST on Online Gaming Sector
The GST council looked into raising the rates of tax. The rise was thought to be between 18% and 28%.
So, if rumours and suspicions about the GST council’s suggestions are true, a 10% GST rate hike for online games would put skill-based, pay-to-play games in the same tax bracket as the lottery and horse racing.
In addition, the user is responsible for paying the GST in this case. No gaming law has ever tried to tax people who play games of skill the same way they tax people who play the lottery.
Paid skill games online don’t work like betting on the lottery or gambling, so the Act might need to be changed to make an exception for “skill games.” So, to make the suggestions happen, the GST Act will need to be changed so that they can be used and have an effect.
Impact of GST on Online Gaming Sector
Because of events like COVID 19 and the addition of esports to the Olympic Games, there has been a huge increase in investment and participation in the gaming industry this year.
India is a big market for online gaming, from casual gamers to professional esports athletes. This is not a secret.
Since Indian law doesn’t cover online games, the end result of this increase would be that customers would have to pay GST, which will only cause users to move to platforms that are more financially stable and increase participation from outside India.
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Tag : GST Filing, GST Registration, TDS Filing