Peak XV, Tiger Global, others urge PM Modi to review India’s online gaming tax

a. If “full value of bets” is understood in a manner where GST is levied on every contest played every time with fully taxed winnings, the GST burden will increase by 1,100% and on account of taxation of redeployed player winnings, the same money will get taxed repeatedly resulting in a scenario where over 50-70%% of every rupee will go towards GST , thereby making the online real money skill gaming business model unviable. This will lead to write off of investments made and would hurt the investor confidence.

b. If “full value of bets” for the purpose of levy of GST on online gaming is the full deposit value i.e. deposits made by users and not taxed again if the winnings are redeployed to play a game (at par with casinos), there will be a 350% increase in GST burden. This will result in the closure of most gaming startups and will require major restructuring across the industry to survive. Importantly, as deposits for online games are digital and made via authorised payment channels, it would allow GST authorities to track and verify all GSTfilings and remove any scope for manipulation by unscrupulous actors.

c. If 28% GST is to be levied on the Gross Gaming Revenue (GGR)/Platform fees, there would be a 55% increase in GST quantum. This would ensure that the Indian online gaming operators are able to survive and are able to be a key contributor to the Indian economy. In addition, such a suggestion of levying GST on GGR would be in line with internationally accepted and proven practices.