Is 28% GST applicable on video games, esports? Here's what ESFI says
New Delhi, July 24, 2023
28% GST: According to ESFI, Esports has been officially recognised as a 'sport' by the government which distinguishes it from any and all activities like iGaming like fantasy, teen patti, and rummy
The 28 per cent goods and services tax (GST) on the full face value of online games will not have an impact on video games and the Esports industry, Vinod Tiwari, president of the Esports Federation of India (ESFI) said on Monday.
Tiwari, who is also an acting director general of the Olympic Council of Asia, said, "It is imperative to first understand that the 28 per cent GST is going to be applicable to the iGaming sector, including Real Money Gaming (RMG), fantasy sports, teen patti, rummy, and poker which are categorised under gambling or betting in the rest of the world. Contrary to some media reports, this GST is neither applicable nor will it have any impact on the 'Video Games' or the Esports industry."
He added that Esports has been officially recognised as a "sport" by the government which "finally and thankfully" distinguishes it from any and all activities like iGaming such as fantasy, teen patti, rummy, poker, betting, and gambling, among others.
"It will carry on to be taxed the way it always has been. Theories of 'game of skill' and 'game of chance' which only exist in our country neither apply nor are relevant in the Esports ecosystem," Tiwari said.
Earlier this month, the Centre's goods and services tax (GST) Council announced that it would impose a 28 per cent tax on funds that online gaming companies collect from their customers. It is being seen as a blow to the $1.5 billion industry that has surged in popularity and attracted foreign investment.
Finance Minister Nirmala Sitharaman said the decision to impose a tax on the total amounts gaming companies collect was taken after consultation with states, and the intent was not to hurt the industry.
But industry representatives have repeatedly said it would hurt their earnings and the extra charges were likely to be passed on to customers. Last week, a group of 30 investors, including Kalaari, Peak XV Partners and Tiger Global, wrote a letter to Prime Minister Narendra Modi asking to relook at the 28 per cent tax.
Tiwari also said that the Centre must impose a clear distinction between iGaming, which includes real-money gaming, and Esports. Esports has been officially designated as one of the medal sports in the 20th Asian Games Aichi-Nagoya 2026.
[The Business Standard]
