28% GST only applicable to iGaming; will not affect Indian Esports industry: ESFI

In the recently conducted 50^th meet of the Goods and Service Tax (GST) Council in New Delhi, it was announced that 28% GST will be levied on the full value of online gaming, horse racing, and casinos. Further, the GST Council further agreed that there should be no distinction between a 'game of skill and a game of chance.'

Clearing the confusion regarding whether the GST will have any sort of impact on the Esports or video gaming industry of the country, Vinod Tiwari, President of Esports Federation of India (ESFI) and acting Director General of the Olympic Council of Asia stated, “It is imperative to first understand that the 28% 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.”

“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,” said Tiwari.

In April of this year, the government made amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 to lay out a comprehensive framework for Online Gaming Eco-system. According to Tiwari, instead of using the umbrella term of “online gaming”, the GST council should have ideally used the more specific term “iGaming’ which is known worldwide, or even “online real money game” which is defined in “The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules to avoid the confusion.

"We must acknowledge the truth that the primary objective of the 400 million Indian video gamers (and approximately 3 billion gamers worldwide) is ‘purely entertainment’, and not financial gains or making money. It is regrettable that in India, our Video Games or Esports Industry is often unjustifiably associated with 'iGaming, betting, RMG, gambling, and many more, which creates unnecessary confusion and misperceptions," he added.

Additionally, it is crucial to highlight that video game publishers have strict policies against implementing entry fees for any Esports events organised using their video games, further separating it from iGaming.

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