Youngsters & Online Gaming GST: Lessons in Policymaking

INDIA’S DIGITAL REVOLUTION has given rise to a thriving entrepreneurial ecosystem, fuelled by the Gig Economy and the dominant presence of Millennials and Gen Z (GEMZ). The GEMZ population represents a significant proportion of India’s demographics and is often hailed as the nation’s soft power. This youth cohort, who make up the largest productive workforce, possess distinct social behaviour and thinking patterns.

- Srinath Sridharan

We can observe this through their digital proficiency and the emergence of new businesses and models catering to their evolving consumption patterns, and application of emerging technologies. Given their influence across society, social media, electoral politics, and policy, one would expect them to have a significant impact. Does the public policy fail them, by not understanding them?

The recent announcement of the highest GST rate on online gaming stands tall. Firstly, the government allowed investors to invest in online gaming platforms over the years, allowed them to proliferate, create jobs and bring in capital. Then came the political-moral-coated assertion equating gaming with gambling. Such policy risk will always spook investors, importantly foreign investors, and is a poor demonstration of the intent of Digital India. The post-announcement ‘clarification’ narrative that the GST rate was always at 28 per cent is in poorer taste. Just in case it was so, it shows the huge communication gap in taxation policy.

Consistency and predictability in policy-making are crucial for attracting both domestic and foreign investments in the digital entrepreneurship space. The traditional approaches to policy development are inadequate in a rapidly evolving landscape where emerging technologies and societal adoption demand forward-thinking policies.

A few weeks ago, we witnessed a similar back-and-forth situation regarding TCS on foreign remittances. The policy was initially announced with urgency, but despite public outcry, it was swiftly reaffirmed as an excellent measure. It was then postponed for a few months, and the reasons were ascribed to political influence. These actions seem to be revenue-focused attempts at extracting more from those who are already paying taxes.