Ministry of IT is creating one consolidated view on skill games and this will percolate to all ministries and across states, said Rajeev Chandrasekhar, the Minister of state for electronics and information technology, in a meeting with top executives and founders from gaming companies, on Tuesday.
The meeting was called to discuss India’s draft online gaming rules.
The Minister was specifically replying to a question on the Finance Ministry’s divergent view from the IT ministry on the issue of skill games vs Games of chance.
This statement is significant in the backdrop of the Directorate General of Goods and Services Tax (GST) Intelligence slamming a 28% GST notice on Bengaluru headquartered Gameskraft. GST at rate of 28 % is applicable on games of chance, and the skill gaming industry pays 18 % GST on the commission.
The Finance Ministry has refused to recognise this distinction while giving a notice to Gameskraft. Gameskraft has challenged this in the Karnataka High Court and was granted an interim relief by the court.
Indian online gaming companies have also been at the receiving end with some states refusing to recognize this distinction between games of skill and chance. Currently, games of skill are not allowed in states like Assam, Andhra Pradesh and Telangana.
In Tamil Nadu, a bill on banning online skill games has been proposed in the state. This move by the Ministry of IT will lead to clarity on games of skill and provide much needed regulatory stability to this growing sector.
Interestingly, the Supreme Court has consistently held the view for the past 50 years that competitions that involved substantial skill were not gambling activities. Such competitions are business activities protected under article 19(1)(g) of the constitution. This includes games like rummy and poker.