Even as the online gaming industry continues to protest the GST Council’s decision to levy 28% tax on real-money gaming at full face value, the Council will reportedly bring payments and winnings received in virtual digital assets (VDAs) under the tax ambit.

The move is targeted at bringing both overseas and domestic online gaming companies that accept and make payments in VDAs, such as cryptocurrencies, under the tax ambit, ET reported.

The decision is expected to be taken in the GST Council’s next meeting on August 2. During the meeting, the Council will take a final decision on how GST will be levied on online gaming, casinos and race courses. It is also expected to provide clarity on how it plans to impose the 28% GST in the aforementioned areas — either on the entry fee or each bet.

A clear definition of “online gaming” and “online money gaming” may be provided by amending the CGST Act, the report said.

Online games where players pay, deposit or receive money or money’s worth, including VDAs, are likely to be categorised as online money gaming. Any kind of experience or gift awarded to players as ‘prize’ will also fall under this category.

Earlier this month, the GST Council decided to impose a 28% GST on the full face value for real-money gaming platforms, with no distinction between games of skill and games of chance. Earlier, only 18% GST was applicable on the platform fee charged for games of skill.

The decision has been strongly criticised by the gaming industry, saying it would make the entire sector disappear. Industry stakeholders have also written to the government, urging it to reconsider the GST Council’s decision to levy 28% GST.

Days after the last meeting of the GST Council, a group of over 100 gaming startups and a few industry federations wrote a letter to the government asking it to reconsider the decision to levy 28% GST on the sector on full value.

Later, as many as 30 domestic and Indian investors, including Kalaari Capital, Peak XV Partners, Orios Venture Partners, Tiger Global Management, Alpha Wave Global, and Steadview Capital, wrote to the Prime Minister’s Office to reconsider the decision.

Meanwhile, a group of 45 gaming studios also wrote to the Prime Minister’s Office, the Ministry of Electronics and Information Technology and the Ministry of Information and Broadcasting, seeking a clear distinction between video games and real-money gaming.

According to a KPMG report, the Indian gaming industry is expected to grow to a size of $3.9 Bn by 2025. The sector is expected to create over 1 Mn jobs by 2023.