Online Gaming Will Attract Investors Once Taxation Becomes Clearer: Nirmala Sitharaman

The online gaming industry in India is expected to grow to Rs 29,000 crore by 2024-25, up from Rs 13,600 crore in 2021.

A final decision on the taxation of online gaming is expected to be made by the GST Council in its next meeting.

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The Centre is considering taxation policy for the online gaming industry, according to Finance Minister Nirmala Sitharaman. She responded to a question from South Korean gaming company Krafton on India's plans to attract foreign investment in gaming companies while addressing the Indian diaspora in Seoul. Sitharaman said that the discussion is taking place at the ministerial level in the Goods and Services Tax (GST) Council, which she chairs, into various aspects of online gaming, including taxation and regulation. She expressed confidence that the sector would attract investment once the policy is finalised and taxation becomes clearer.

"Once the policy certainty arrives, taxation becomes more... clear, it will attract investors," Sitharaman said. 

The online gaming industry in India has witnessed a significant rise in the number of users during the Covid lockdown. According to a KPMG report, the industry is expected to grow to Rs 29,000 crore by 2024-25, up from Rs 13,600 crore in 2021, as reported by PTI. However, the issue of levying GST on online games has been unresolved for nearly two years, with many states advocating for a lower tax rate on games that require skill, as they believe these games should not be treated on par with games of chance.

A final decision on the taxation of online gaming is expected to be made by the GST Council in its next meeting, scheduled for either this month or June. Last month, the Ministry of Electronics and IT notified norms for the online gaming sector, categorically prohibiting all games involving betting and wagering.

The online gaming sector will adopt a self-regulation model, and three self-regulatory organizations (SROs) will initially approve games that can operate in the country according to the rules. Sitharaman also expressed her admiration for Japanese and Korean animes and memes in response to Krafton's question and said she would welcome Korean gaming companies to India.