The decision of imposing 28% GST on online gaming faced strong backlash from the industry and its players. However, the announcement also raised concerns in the esports industry, which stood on unclear grounds following this change. But a known Indian esports organisation has assured that India’s esports is safe from the new tax hike.

Esports and Online Gaming are different: Here’s why

According to a statement from the Esports Federation of India (ESFI), the 28% GST is only applicable to the full face value of online gaming and not esports. There has been confusion caused by reports that have defined the two terms collectively, but esports and ‘video games’ in general won’t be impacted by this change. ESFI clarified that the tax change only affects iGaming (another term for online gaming), which refers to games such as fantasy sports, rummy, poker, and others.

These are classified under online gaming in India but are typically categorised under gambling or betting in the rest of the world. President of ESFI, Vinod Kumar Tiwari, assured that the esports industry of India won’t be impacted since Esports has been officially recognised as a sport by the Indian government. It is also worth noting that many game publishers also have strict rules against hosting esports events with entry fees, which differentiates it from iGaming.

In other words, the video gaming and esports industry will continue to be taxed the same as always, which is at 18%. The entire debate around ‘game of skill’ and ‘game of chance’ does not apply to the esports ecosystem as well. Tiwari further adds that the confusion could have been avoided if the GST Council used the term ‘iGaming’ to refer to online real-money games that involve wagering with money.