#141: 28% GST on Face Value Gaming
Why is Shark Ashneer Grover and Goa Finance Minister unhappy?
From sharks like Ashneer Grover to Goan Finance Minister, 28% tax on gaming has left many unhappy🥲
What's this new decision? What all do you need to know about it for #UPSC?🤨
Everything in this post
What's the matter?
Uniform 28% tax levied on 'full face value' for:
- Online gaming
- Horse racing
- Casinos
Note: Lottery, Betting and Gambling are already in this list
What does full face value mean?
Understand it with an example
- Presently, 18% tax paid by gaming companies on 'platform fee'
- Say, 10% is platform fee. Of ₹100 taken from user, companies make ₹10 and pays 18% GST on this ₹10 (i.e. ₹1.8)
- With 28% GST on 'face value', the tax would be on entire ₹100.
- This means, tax that is ₹1.8 presently would be ₹28
How big is online gaming markets?
- Mobile gaming industry estimates $5bn revenue in 2025
- 2017-2020: CAGR 38% growth in 🇮🇳, 10% in 🇺🇸, 8% in 🇨🇳
- 🇮🇳 New Paying Users (NPU) at 40% growth in 2020 and 50% in 2021
What are negative impacts of this decision?
- Potential to kill lacs of jobs wiping off the industry
- Rise to anti-national illegal offshore platforms
- Policy inconsistency kills investor confidence (large FDI as VC funding)
Some more questions:
1. Why did govt. do this? To address 'addiction'
2. Who's impacted? Some profitable as well as funded companies
3. Why's shark Ashneer Grover rattled? His 'third unicorn' was in dream fantasy sports; directly impacted
4. Why's Goa FM unhappy? Casinos industry in Goa impacted directly
Bit on GST
- Consumption based tax via 101st Amendment 2016
- Lives up to mantra of 'One Nation One Tax'
- 4 slabs currently: 5%, 12%, 18% and 28%
- Structure:
a) Central GST: covers Excise/Service tax
b) State GST: VAT, luxury
c) Integrated GST: to cover state & union taxes
Bit on GST council
- u/A 279A of Indian constitution
- Joint forum of states and center
- Finance Minister chairs with members from all states
Functions:
- To make recommendations on imp issues to the states and union
- Decides on all four slabs of the GST
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