Union Budget 2024: Will The Finance Minister Slash The GST On The Gaming Industry?
India's online gaming market has witnessed exponential growth in recent years, projected to rise from $1.6 billion in 2022 to $5 billion by 2025 on the back of an increased smartphone and internet penetration, according to an 'All India Gaming Federation report'. However, the GST rate hike to 28% from October 2023 has significantly impacted this industry, thus hampering the sustainability of startups in this sunrise sector. While this move has certainly put a dent in the profit margins of the industry, it has even led to downsizing and closures in some instances.
As established in Karnataka High Court's judgment in the case of Dream11, games preponderantly involving 'skills' like fantasy sports and electronic sports (esports) ought to be differentiated from pure 'chance' based gambling. However, the blanket 28% GST on all deposits made in gaming apps does not distinguish between these formats, thereby treating 'skill', 'chance', and 'addictive' betting on an equal footing.
Given this, while the technology and innovation-driven e-sports companies have sought a rate rationalization relief / GST review from the government in this year's interim budget, the big question remains as to whether the Hon'ble Finance Minister would accede to such requests.
