INDIAN GAMING STATESIDE
MeitY to start certifying online games if industry fails to form SROs before deadline
The Ministry of Electronics and Information Technology (MeitY) notifi ed new online gaming rules in April this year and gave the industry three months in order to submit their proposals for forming self-regulatory organizations (SROs). More than two months have now elapsed since the notifi cation date (April 6) and so far no SROs have been formed yet. Notably, however, the All India Gaming Federation (AIGF) has come up with a draft model charter for an SRO till now. Last month, MoS MeitY Rajeev
Chandrasekhar said that the Centre will start certifying online games as permissible or not till the industry bodies form the SROs. He clarifi ed the same on Friday, saying that they would step in and fulfi ll the obligations, as reported by The Financial Express.
According to the new online gaming rules, online gambling and betting games are prohibited while real money games will require permission from the SROs to operate. As of now, there are three SROs planned to oversee the online gaming industry and they will include people with expertise in various fi elds like online gaming, education, psychology and individuals dealing with protection of child rights. Online gaming fi rms will have to apply to an
SRO to release a game. The SRO will then evaluate the game and decide whether to permit it or not. In case of rejection, the SRO will have to provide proper reasoning. Apart from AIGF, other SROs being formed
are by the Federation of Indian Fantasy Sports (FIFS) along with E-gaming Federation (EGF). The details are yet to be made public.
Rajeev Chandrasekhar Meanwhile, a key development is likely to
take place for the online gaming industry this month as the GST Council is expected to decide on the GST tax rate. The top industry fi rms wrote to the government through the FICCI Gaming Committee on Friday not to raise the tax rate to 28%.
Online gaming fi rms write to CBIC through FICCI Gaming Committee not to increase GST rate to 28%
Online gaming firms have approached the Central Board of Indirect Taxes & Customs (CBIC) through the FICCI Gaming Committee, urging them not to increase the GST rate on online games from 18% to 28% as recommended in the Group of Ministers (GoM) report. The FICCI Gaming Committee comprises
Dream11, Zupee, MPL, Games24x7, Nazara Technologies, Winzo, Krafton, MyTeam11, HDworks and others as members. The online gaming industry believes that
changing the tax rate to 28% on the contest entry amount (CEA) as suggested by the GoM in its report, which was submitted during the 47th GST Council meeting in May last year, will severely impact the online gaming industry. According to The Economic Times, the latest
letter sent to CBIC states, “online gaming industry needs to be treated at par with information technology service providers. As per the current practices followed by the online skill-based gaming companies, tax is paid at 18% on the platform fees (GGR) charged from players.” Online gaming firms and think tanks believe
that the higher tax rate – that too on the CEA – will make the survival of the firms much more difficult, especially for startups in the industry. Instead, they believe that the tax rate should be levied on the Gross Gaming Revenue (GGR).
“The approval from the government
recognised Self-Regulatory Body will clearly segregate permissible online real money games from gambling, betting, wagering,” said Joy Bhattacharjya, Director General of Federation of Indian Fantasy Sports (FIFS). Bhattacharjya further said that these online
games have been ruled as games of skill in multiple court judgments, setting them apart from games of chance. In this case, the games approved under the new online gaming rules should be taxed on GGR and not on CEA. Online gaming firms have reiterated that the
games provided on their platforms are games of skill and should be treated apart from games of chance. The gaming industry had also approached the CBDT and PMO in March this year regarding this matter. Meanwhile, CBIC chairman Vivek Johri has
already stated that any online game where winning depends on a certain outcome will attract 28% GST on the total bet amount. The
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final decision regarding the GST rate on online gaming is expected to be taken in the upcoming GST Council meeting later this month.
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