TIL Desk Lucknow:👉The Skill Online Games Institute (SOGI), a leading institution focused on advancing knowledge and data-driven insights for the online games industry, is calling for the GST Council to reconsider the 28% tax on the full-face value of online games, a measure that is driving Indian players to offshore, illegal gaming platforms. This taxation policy has created a surge in illegal gaming, with offshore platforms promoting themselves as “No-GST” alternatives and luring Indian users. The shift has already seen a 35% increase in Indian players on these platforms since October 2023, and on an annualized basis, this trend represents a 57% rise in illegal activities.
Lt. Gen. Vinod G. Khandare, former Director-General of the Defense Intelligence Agency, has emphasized that this trend poses a “grave threat to India’s national security,” as unregulated, foreign platforms grow in dominance.
Amrit Kiran Singh, Founder President of SOGI, stated, “The 28% GST on full-face value is not just a blow to the Indian gaming industry—it also incentivizes illegal offshore gaming. This policy is deterring investment, stifling innovation, and driving users away from local, regulated platforms. A collaborative effort with the government is essential to develop a balanced taxation framework in India, that encourages growth while ensuring fair compliance.”
The Impact on India’s Gaming Sector
Despite the growth of the Indian gaming market, which generated $3.1 billion in FY23 and is projected to reach $7.5 billion by FY28 with a projected CAGR of 20%, SOGI research indicates that India’s online gaming industry contributes just 1% to global gaming revenues. With China and the U.S. contributing 25% and 23%, respectively, this highlights India’s untapped potential. Prime Minister Narendra Modi has repeatedly emphasized the need for Indian games to succeed on the global stage, notably in his Independence Day address on August 15, 2024, underscoring the importance of this sector to India’s future.
However, the 28% GST on full-face value threatens to curtail this potential, putting Indian platforms at a disadvantage against international competitors, enabling illegal platforms to attract Indian players with the lure of tax-free winnings. This situation not only undermines local businesses but also raises significant concerns under the Prevention of Money Laundering Act (PMLA).
Challenges in Uttar Pradesh and Beyond
SOGI’s research reveals that 78% of the time Indian gamers spend online is on foreign-backed platforms, allowing overseas companies to reap profits from Indian consumers. In Uttar Pradesh, this trend is even more pronounced, with foreign games, particularly those from Chinese companies, dominating the market. SOGI’s research also suggests that Uttar Pradesh has spent 6% less time in an indoor environment compared to the national average over the past 4 years. Analysing gameplay data from August 2019 to May 2024, SOGI has identified that in key cities like Agra, Kanpur, and Ghaziabad, the prevalence of Chinese-owned games surpasses the national average. Even in Lucknow, the dominance of these games is only slightly below the national trend.
A Call for Responsible Growth
SOGI advocates for a balanced approach that fosters industry growth, enables homegrown innovation, and protects consumers. By leveraging technology, the industry can implement responsible gaming measures that prevent addiction and reduce money laundering risks. “Digital interventions,” Amrit added, “can play a vital role in promoting responsible gaming, as evidenced by the AIIMS study funded by the Indian Council of Medical Research (ICMR). Through technology, we can introduce time-outs for players who overindulge and implement measures to combat money laundering. These proactive steps reflect the industry’s dedication to tackling its challenges responsibly.” SOGI emphasizes the importance of using technology to tackle challenges such as addiction, rather than relying on increased taxation as a solution.
The organisation’s Advisory Board includes Yashvardhan Sinha, IFS, a distinguished diplomat and former Chief Information Commissioner of India; Dr. Yatan Pal Singh Balhara, Secretary General of the World Association on Dual Disorders (WADD) and consultant to the World Health Organization and UNODC; and Shivani Jha, tech policy lawyer and leader of the E-Gamers & Players Welfare Association (EPWA).
