Explained: Here is why your video games would not become more costly

If you are playing video games the 28 percent GST imposed by the finance minister on online gaming doesn’t impact you. It is for RMG (real money games) players only.

As per the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023, online real money game means an online game where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit.

The guidelines also provide an explanation of the definition. It says, “Winnings means any prize, in cash or kind, which is distributed or intended to be distributed to a user of an online game based on the performance of the user and in accordance with the rules of such online game.”

Here’s all you need to know about taxation if you are a video game player:

1. Money wagering element of online games: The 28 percent GST slab is only applicable to real money games because these games involve a wagering element. Simply put, when a player wagers money on a real money game, they are essentially betting on the outcome of the game. If the player wins, they will receive a payout from the game operator. If the player loses, the game operator will forfeit their wager.

2. What falls under video games: Video games include all games played without any waging element. These can be single-player video games, multiplayer video games, casual video games or simply educational video games. Ludo King, Candy Crush Saga, Clash of Clans are some popular examples.

3. What falls under RMG: Games that are classified as real money games and are subject to the 28 percent GST slab include online poker, online casino games, sports betting and fantasy sports too.

4. Taxation on video games: The extent of purchase on video games is micro transactions like buying game skins, lives, boosters etc. These are still taxed at 18 percent and the 28 percent GST has no impact on it whatsoever.

5. Future of video games: There is a central policy being worked on for the AVGC (Animation, Video Games, Graphics and Comics) right now to promote the industry. As per domain experts if the Government of India decides to invest in the soft cultural power of video games and its export potential, there might be scope for a drop in the GST slab for video games made for entertainment.