Indian law firm urges GST Council to review online gaming taxes

An Indian law firm has issued a report criticising the Group of Ministers (GoM) recommendations for GST rates on online gaming.

India.- Lakshmikumaran & Sridharan (LKS) Attorneys, an Indian law firm, has released an analysis that challenges the recommendations put forth by the Group of Ministers (GoM) regarding GST rates for online games in the country. 

As the GST council meeting approaches, where the final tax rate on online games will be decided, LKS’s report has criticised the notion of applying a 28 per cent GST rate on casinos, racecourses, online gaming, and lottery. The report suggests these activities should be treated differently based on their nature, and that games of chance should be distinguished from games of skill.

One key argument made is the recent ruling by the Karnataka High Court, which classified games on the Gameskraft platform as games of skill rather than gambling. According to the analysts, this ruling dismisses the applicability of a 28 per cent GST rate on such games. 

LKS argued that online games should not be equated with activities like lottery, betting, and gambling. They also highlighted the global trend of taxing online gaming based on Gross Gaming Revenue (GGR), with tax rates ranging from 15 per cent to 20 per cent in developed nations. 

According to G2G News, LKS also emphasised the importance of aligning the GST position with established jurisprudence and central legislation, urging the GST Council to consider recent legislative developments and global best practices. 

The firm has asserted that India’s gaming market, estimated at around US$2.6bn in 2022 and projected to reach US$8.6bn by FY27, can only reach its full potential with a fair and reasonable taxation framework.