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Connect with us The market size and estimated growth numbers hint a steady growth trend wherein global online gaming revenue is estimated to grow from US$38 billion (approx.) in 2019 to US$122 billion (approx.) by 2025. On similar lines, the domestic market for online gaming is estimated to grow from US$906 million in 2019 to over US$2 billion in 2023 representing a CAGR of 22% approx. Therefore, the domestic industry has the potential to scale quickly and become a meaningful contributor. Digitizing the gaming industry has led to tapping into an otherwise unorganised sector and brought more accountability. Multidisciplinary professional services organization It is imperative to analyse the GST implications and impediments therein that may impact the business operations for the industry as a whole. It is also worthwhile to evaluate the global best practices for the taxation of the industry and provide much-needed clarity on aspects related to valuation and applicable GST rate. About EY
The settled position in law has been the classification of online games as game of skill and thus, outside the purview of betting and gambling. However, the industry being in nascent stage and lack of specific categorisation of online games as game of skill by the government has resulted in ambiguity. The inconsistencies among state laws related to scope of betting and gambling and prohibition of even rummy games in some states has further aided to uncertainty. The ambiguity has the potential to raise unnecessary tax demands beyond the rake fee earned by online gaming platforms. Such aggressive litigation would significantly impact the sustainability of the online gaming business. Select your location EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
Facebook GST on online skill games: How online gaming is taxed in India About this article EY | Assurance | Consulting | Strategy and Transactions | Tax Sports and gaming have been a traditional source of rejoice, recreation and engagement for players and spectators alike. Within it, online gaming provides avenues for an on-demand, real-time gameplay without the limitations of a physical venue and time zones. COVID-19 and the resultant social distancing norms have further forced the masses to explore alternative means of recreation and social engagement and in turn, aided the growth of online gaming. A game of chance translates to betting or gambling activities and attracts a higher GST rate of tax vis-à-vis game of skill. Therefore, the online games being offered by industry players shall qualify as game of skill and thus, legal in India. The differentiation vis-à-vis betting and gambling impacts the Indirect Tax implications.