On July 24, 2023, the Esports Federation of India (ESFI) issued a statement specifying that the Goods and Services Tax (GST) at the rate of 28% applicable to online gaming did not have a bearing on the esports segment.
Recently, the Goods and Services Tax (GST) Council, in its 50th meeting, proposed the imposition of tax at a rate of 28% on online gaming, casinos and horse racing. In the case of online gaming, the tax was said to apply to the full value of the bets placed.
The GST council reiterated the imposition of the tax in its 51st meeting and plans to implement it from October 1. There are hints of review down the line, however, they may be limited to valuations and tax rates. States are required to amend their laws for implementation, however, the norms will explicitly clarify that tax cannot be levied in states where ban is in place.
The President of ESFI, Vinod Kumar Tiwari, stated that the said rate “is going to be applicable to the iGaming sector, including real-money gaming (RMG), fantasy sports, teen patti, rummy, and poker, which are classified under gambling or betting in the rest of the world. Contrary to some media reports, this GST is neither applicable nor will it have any impact on the ‘video games or the eSports industry”.
Mr. Tiwari, who also serves as the Director (NOC & International Relations/Marketing Department) at the Olympic Council of Asia (OCA), added that the concepts of “game of skill” and “game of chance” do not have any relevance in the esports industry. He expressed dismay at the correlation assumed between esports and iGaming (and other games involving betting & gambling) and asserted that video gamers seek entertainment and not monetary gains.
It was clarified that esports differs from activities such as iGaming, especially considering the strict policies adopted by video game publishers against charging entry fees for esports events, and that esports will continue to be taxed at the rate of 18%.