GST hike to affect Hyderabad bid to emerge as gaming firms’ hub

HYDERABAD: With talk of the Centre amenable to proposal before the GST Council on raising the slab on online gaming industry from the current 18 per cent to 28 per cent gaining ground, the tension among all stakeholders is palpable. 

Nearly 80 gaming companies that operating from here fear that the State government’s ambitious plan to propel Hyderabad as the one-stop destination for Animation, VFX, Gaming industry and Comics (AVGC) industry by setting-up IMAGE Tower in a sprawling across 1.6 million sq ft in the city would be severely impacted.

The Group of Ministers (GoM) constituted by the Centre to study the proposed GST slabs on online gaming is set to hold its second meeting of May 18. Finance Minister T Harish Rao will represent Telangana at the meeting. 

“The burgeoning potential of the online gaming industry in India needs to be tapped properly. It is necessary that gaming, that involves skills and not luck, should ideally be taxed at 18 per cent. The GoM should take a positive view and recommend continuance of the current practice of considering the platform fee/GGR. Since online skill-based gaming is not gambling or betting, a clarification needs to be issued to resolve litigation and provide relief to the industry,” opined Rameesh Kailasam, CEO, IndiaTech.Org.Experts point to leading markets like the USA, UK, Australia and Germany levying tax on GGR at a rate between 15-20 per cent. 

“We’ve seen that globally, markets which started taxing the prize pool instead of the GGR have had to revert to taxing only GGR as it resulted in non-compliance, revenue leakage and grey markets,” said Gopal Jain, senior Supreme Court advocate. 

Experts feel that a regressive tax structure will dampen the growth of IMAGE and will affect the growth of Hyderabad as hub of game development and also employment status of developers