NL Corresspondent
Jammu Tawi: India’s online gaming sector, currently valued at USD 3.1 billion, has the potential to expand to a staggering USD 60 billion by 2034. However, challenges surrounding regulation and taxation persist. India stands out for its high tax rate, imposing a 28% Goods and Services Tax (GST) for all formats on the total deposits made by players. This practice stands in contrast with global practices that tax, regulate, define and distinguish Games of Skills from Games of Chance. Several countries further carve out Fantasy Sports as a distinct category within games of skill and regulate and tax them separately, according to the report “Path Ahead for Online Skill Gaming in India: Unpacking Global Standards for Regulating and Taxing Online Skill Gaming” by the United States India Strategic Partnership Forum (USISPF) and TMT Law Practice. The report highlights the regulatory frameworks and taxation policies in 12 key gaming markets, including the U.S., Germany, the U.K., Denmark, and Belgium. The report also highlighted that the United Nations Central Product Classification (UN CPC), which forms the basis for taxation in domestic jurisdictions globally, defines online gaming separately from online gambling.The UNCPC is a globally recognized system that ensures consistent classification of products, including online games and online gambling. Under UNCPC, online games (Entry 84391) and online gambling (Entry 96921 read with Entry 96929) are treated as mutually exclusive categories with no overlap. Online games include role-playing games (RPGs), strategy games, action games, and card games played on the internet even when played with entry fee or real money, excluding any form of gambling. Online gambling covers services like lotteries, lottos, off-track betting, and casino services. The report also notes that the North American Industry Classification System (NAICS) categorizes gambling separately from fantasy sports and skill-based games. For instance, Skillz US INC, which offers skill-based games, has a separate NAICS code compared to DraftKings, which offers fantasy sports games.
