The online gaming sector is a quickly developing industry that has the capability of contributing to the country’s motive of turning into a USD 1 trillion digital economy, generating employment, and growing innovation, a report said. Regulation of online gaming won’t just open up economic opportunities yet, in addition, address different social issues, a report named ‘Online Gaming in India: The Taxation Quandary’ by Primus Partners said.

Declarations in Union Budget 2023-24 are positive for the sector as it has addressed the persevering request to consolidate the offset of misfortunes in the computation of gains from online games for income tax, it said.

A relevant issue connecting with the execution system proposed in the Union Budget for TDS (Tax Deducted at Source) on online games has been featured in the report.

“The issue has arisen due to amendments to section 194B under which online gaming is currently covered from April 1, 2023, and the separate provision on online gaming i.e section 194BA coming into force from July 1, 2023, leading to an anomaly,” it said.

It would be ideal to smooth out the applicability of the amendments for “online game” and lay out a solitary compelling date of April 1, 2023, it said, adding, on the other hand, the ongoing current tax regime could be continued for the period between April 1, 2023, to June 30, 2023, to dispose of any disparities in understanding.

The repetitive development will likewise prompt huge expenses for the industry bringing about pointless costs that will be hard to bear for a few small and medium size gaming organizations, the report said.

On the GST front, the report expressed that proof from nations where the sector has been created shows the GGR (Gross Gaming Revenue) tax model empowers the industry to thrive.

“Levying GST on the total face value would be a departure from established practices, besides making the sector unviable. The recent changes in TDS on income from the prize pool in online gaming without any threshold should be considered by the GST Council,” it said.

Online gaming is a quickly developing industry and would be considered normal to develop at a CAGR of around 27% in the next five years in India, it said, adding, the sector holds a vast potential to help India’s GDP and is expected to be a major employment generator, with the capacity to add more than 1 million positions by 2030.

“A robust and enabling regulatory framework for a dynamic sector like online gaming would ensure a responsible, transparent, and safe environment for all,” said Primus Partners India CEO Nilaya Varma.

The online gaming sector holds gigantic potential on the off chance that it is empowered with the right regulatory help from the government and a growth-friendly tax regime, he added.

Credit: The Economic Times