[Opinion] GST on Online Gaming | Controversy, Challenges & Way Forward

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  • By Taxmann
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  • Last Updated on 6 February, 2023

GST on Online Gaming

Surjeet Singh Negi – [2023] 147 taxmann.com 76 (Article)


The term “online game” refers to games that is offered on the Internet and is accessible by a user through a computer resource. Online Games can range from graphics to virtual worlds populated by many players simultaneously and made available by making certain deposit on part of the users with expectation of earning winnings. This is a part of the sunrise industry with a growing & popular demand for web-app based gaming access.

India Inc. is expecting its multibillion-dollar online gaming industry to more than triple in size over the next four years. According to a report published by Sequoia and BCG, India’s mobile gaming sector will grow from $1.5 billion in revenue in 2020 to $5 billion by 2025.

Further, as per the “India Gaming Report 2021 by Lumikai and Redseer”, India has emerged as the fastest growing gaming market in the world with growth in new paying users (NPU).

The transaction-based games revenues increased by 26% in India and the number of paying players increased by 17%, from 80 million in 2020 to 95 million in 2021, according to a report from EY FICCI (Federation of Indian Chambers of Commerce and Industry).

Status in India

Gambling/betting is illegal in India. Some Indian states have banned such games, citing mental health and addiction concerns. In others states, courts have overturned state bans. Since gambling or betting is illegal in India e.g. activities of betting on football/cricket match, on account of game of chance, the same is legal, if the same is played via online skill-based gaming apps i.e. Dream11/MyTeam11 etc.

In this respect, the All India Gaming Federation (AIGF) – the apex body for online skill-gaming established in May 2016, has demanded the clear distinction between gambling and “online skill gaming”, where the element of skill surpasses the element of chance.

Accordingly, a clear differentiation is required by a regulatory framework to avoid any unnecessary litigation on the online gaming industry & related sectors in future.

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