Electronics and Software Export Promotion Council (ESC) has urged the government to maintain the “status quo” in levying Goods and Services Tax (GST) on the online gaming industry to give a lifeline to the nascent online gaming sector, which has great employment potential.

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In a statement issued on Thursday in support of the online gaming industry, ESC Chairman Sandeep Narula has urged the GST Council to take a balanced view in the interest of the online gaming industry.

“The announced 28 percent GST as recommended by the GST Council will have a pernicious impact on online gaming, which is not a gambling or a chance game but requires a high degree of skills,’’ Narula said. The tax on online gaming as suggested by the GST Council is imposed without making any differentiation between whether online games require skill or are based on chance.

A blanket imposition of GST at 28 percent on the total amount should have taken into account the GST being paid by online startups at 18 percent as a platform fee/commission. ESC feels that there are many issues that have to be settled while imposing GST on online gaming, which can be pragmatically done only after due consultation with the online gaming industry and GST tax authorities. “Till that time, our request is to put the imposition of the GST in abeyance,” ESC said.

ESC pointed out that a number of companies have come forward to invest in online gaming, spending huge amounts of money on installing equipment and developing software. These units will get adversely affected by the decision since GST will keep many away from playing the game which needs superior skill sets and a lot of mental capacity.

The new levy will limit the industry’s ability to invest in new games, develop innovative software, and impact cash flows and business expansion. The gaming industry is expected to cross Rs 25,000 crore in revenue by 2027. The segment can attract an appreciable quantum of FDI since global gaming majors have started focusing on India.

(Edited by : Keshav Singh Chundawat)