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, strongly opposes the decision by the GST Council to impose a 28% tax on online skill-based gaming. BIF believes this tax is excessive and detrimental to the industry’s potential for long-term growth and revenue generation. In addition, it argues that the tax will hinder the development of 5G, impede broadband traffic and penetration, and fail to foster a sense of responsibility and accountability among gaming intermediaries.

BIF asserts that the GST Council’s decision will have significant negative consequences for the thriving online skill-based gaming sector. It argues that the tax will discourage foreign direct investment (FDI), damage advertising revenues, and hinder the industry’s ability to leverage the potential of 5G technology. BIF warns that this hefty tax could also create opportunities for illicit operators in the black market, posing a serious security threat to national security.

In a statement, BIF noted that the online skill-based gaming industry, with its $20 billion valuation, $2.5 billion in revenues, and job creation, has been a prominent example of innovation and investment. The organization urges the government to adopt a cross-sectoral approach to support innovation and ensure the success of various platforms.

While the finance minister has promised to review the GST in six months, BIF cautions that the majority of the industry comprises small businesses, and many entrepreneurs may be forced to exit the sector as a result of this tax. Furthermore, foreign investments in the sector may be discouraged, and the advertising budget, which currently stands at $1 billion, could be significantly reduced, impacting the media and entertainment industries.

BIF appeals to the government to reconsider its decision promptly, in order to maintain India’s position as a global AVGC powerhouse and align with the Prime Minister’s vision for the country. TV Ramachandran, President of BIF, emphasizes that the online skill-based gaming sector has attracted substantial investments and plays a crucial role in boosting the economy. However, he warns that the proposed tax will deter future investment and lead to numerous entrepreneurs leaving the sector.