Ministers of Goa and Karnataka rally against the GST Council's contentious move, challenging the imposition of a staggering 28% tax on online gaming.

The recent decision by the GST Council to impose a hefty 28% tax on the full face value of bets in online gaming has sent shockwaves through the industry, leaving stakeholders in dismay. This move is being viewed as a significant blow to the gaming sector, with experts warning of potential devastating consequences that could jeopardize the very survival of businesses within the industry. Moreover, the decision is expected to result in massive job cuts and a decline in foreign capital inflow, further exacerbating the challenges faced by the industry.

While the central government believes that this decision will enhance revenue earnings from the gaming sector, dissenting voices have emerged from the states of Goa and Karnataka, shedding light on how this move could spell disaster for the online gaming industry as a whole. The Goa government, in response to this development, is taking proactive measures by planning to reach out to finance minister Nirmala Sitharaman, urging a reconsideration of the decision. Mauvin Godinho, the Industry Minister of Goa and representative on the GST Council, revealed that during the meeting, the state proposed a 28% tax to be levied on the gross gaming revenue rather than the full face value of bets or the full value of consideration made. However, due to a lack of consensus at the meeting, this proposal was not adopted. Godinho further emphasized that the Chief Minister of Goa, Pramod Sawant, will champion this cause, seeking to have the decision reconsidered by the council.

The decision has also faced strong criticism from Priyank Kharge, the minister for IT/BT and rural development and Panchayat Raj in Karnataka. Kharge argued that the imposition of a 28% tax rate on the online gaming sector would not only hinder the country's foreign direct investment (FDI) but also pose a threat to the thriving startup ecosystem. He expressed concerns about the potential negative impact this decision could have on India's ambitious goal of achieving a $1 trillion digital economy by 2025.

Taking to Twitter to voice his discontent, Kharge stated, "Although I personally oppose all forms of gambling, implementing a flat 28% Goods and Services Tax (GST) on the gaming industry has significant negative implications. The tax applies uniformly, regardless of whether a game relies on skill or chance. It would have been beneficial to consider this decision more thoroughly, as it could hinder the achievement of the $1 trillion digital economy target by 2025. Additionally, the Indian gaming startup ecosystem, which has attracted $2.5 billion in investments, may suffer from reduced prospects of foreign direct investment due to this taxation."

The concerns raised by Goa and Karnataka ministers reflect the widespread apprehension within the industry regarding the potential adverse effects of the GST Council's decision. The move has sparked debates and discussions about the necessity for a more nuanced approach that takes into account the distinct characteristics of different types of online gaming activities. It remains to be seen whether the pleas for reconsideration will be heard and if alternative taxation methods will be explored to strike a balance between revenue generation and the growth of the online gaming industry in India.