Horse racing, casinos or online gaming, they are all essentially gambling and should be taxed accordingly — that’s the word from Union Finance Minister Nirmala Sitharaman.

It is also the underlying thought behind the recommendations made by the Conrad Sangma-headed Group of Ministers (GoM) tasked with deciding the GST rate on race courses, casinos and online gaming. The GoM suggested hiking GST on these services from 18 percent to the highest bracket of 28 percent.

But it is not just the surge in the GST rate that's causing online gaming platforms to go up in arms. It's the decision to levy GST on the total pool of money deposited by real-money gamers. "It's absurd," says the industry.

For now, the GST council has deferred its decision on the matter and asked the GoM to go back to the drawing board and come back with its report after feedback from all stakeholders.

The online gaming industry tells CNBC-TV18 that it could be catastrophic if the move goes through as it threatens to kill growth and revenue for the sunrise sector, which is expected to clock $2 billion by 2023.

In an interview with CNBC-TV18, Trivikraman Thampy, Co-Founder & CEO of Games24x7, said the industry can absorb 28 percent GST on revenues but 28 percent GST on overall pool value would make the industry unviable.

“While a GST rate hike from 18 percent to 28 percent on our revenues is high, it doesn’t render the industry unviable. It leaves the industry still fairly competitive. So as long as the GST is going from 18 percent to 28 percent and continues to operate on the same valuation metric which is revenue, that is something the industry can absorb,” Thampy said.

Harsh Jain, Co-Founder & CEO of Dream11, said the Indian consumer could end up paying around 50-60 percent tax on his winnings if the government goes ahead with 28 percent GST on overall pool value.

“Online gaming is a $20 billion industry with $2 billion revenue and paying a billion dollars of indirect and direct taxes today. We would like the industry to continue growing and contribute to the vision of a trillion dollar digital economy. However we don’t want to have a situation where we put 28 percent additional tax on the player’s winnings which only results in Indian consumer being taxed 28 percent GST on their winnings and 32 percent of income tax and TDS. So effectively Indian consumers will get taxed at 50-60 percent on their winnings and it means that no one would ever want to play any of these games and the USD 20 billion industry will disappear,” Jain said.

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