After months of waiting for self-regulatory bodies for real money gaming in India to be finalised, sources informed the Economic Times that the IT Ministry may be benching the process until the views of various ministries on the industry are ‘harmonised’. These include the Indian government’s ministries of Law, Finance, and Home Affairs.
The move also comes after the GST Council hiked the tax rate for online real money games involving wagering from 18% to 28%. Multiple real money gaming companies have been served massive retrospective tax evasion notices in light of the hike (some may be gearing up to challenge the notices in court).`
Economic Times added that some government arms hold a “legacy view” that the industry is non-compliant with tax laws and paying the correct taxes. The IT Ministry is likely to take an official stand on the issue after clarifications from the Finance Ministry, potentially on the rationale behind retrospectively taxing the industry, sources observed. They also added that the self-regulatory framework is evolving, while highlighting security concerns over Chinese companies operating in the industry. Sources speaking to the paper said these issues need to be harmonised first.
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The online gaming rules released in April delegated much regulation of the real money gaming industry to private self-regulatory bodies (SRB). The delays in forming SRBs even led to MoS IT Rajeev Chandrasekhar claiming that the government would step in to regulate online real money games in the interim. However, as we’ve previously reported, multiple SRB applications have been sitting with the IT Ministry for months now.
The self-regulatory framework isn’t without its critics either—panellists at MediaNama events questioned whether bodies closely associated with major real money gaming companies could be trusted to regulate the sector fairly.
“When a body is a caged parrot, how does it expect to hold its masters accountable? How do we solve this inherent contradiction between funding and the structure of the body [which the rules haven’t solved for]?” — Gaming and technology lawyer, Jay Sayta
In a separate note from when the rules were first proposed in January, Sayta also criticised the ‘abdication’ of government responsibilities to the private sector.
“Most self-regulatory organisations are funded and backed by one or two major online gaming companies and therefore there are serious questions on their credibility, independence and autonomy. Further, the government abdicating its responsibility to regulate and monitor an important sector such as online gaming that has various socio-economic implications is not appropriate.”