India Provides Clarity on 28% Tax Rate, Exclusively Applies to Games Involving Real Money

The Indian Government has issued a clarification that online games not involving real money stakes will continue to be subject to an 18% tax rate. This comes after the Indian Goods and Service Tax Council recently increased the tax on real money games to 28%, prompting several media outlets, including GamesIndustry.biz, to incorrectly report that all online games would be subject to the higher tax rate. In a conversation with The Economic Times, Revenue Secretary Sanjay Malhotra emphasized that the 28% tax rate applies only to games that involve wagering on their outcome, regardless of whether they are games of skill or chance. The initial confusion stemmed from the use of the term "online gaming" in legal documents, which led many to believe that the 28% tax rate would apply to all video games. However, according to Mayur Bhimjiyani, co-founder and studio head at Hypernova Interactive, local game developers successfully campaigned to differentiate between video games and real money gaming, and efforts are underway to establish a central policy aimed at promoting the industry. Bhimjiyani suggested that if the Indian Government were to invest in the industry, it could potentially lead to a reduction in the GST slab for entertainment-focused video games.