The companies said a change in GST rate from 18% on GGR to 28% would be "extremely detrimental to the survival of the online gaming industry as no business operations can survive with such high taxation". Also, the impact of charging GST on the entire stake value – whether at the rate of 28% or 18% – would be equally disastrous for the online gaming industry, they said.

According to Saumya Singh Rathore, a co-founder of gaming platform WinZO Games, proposing a 28% tax for gaming companies that are still focused on building intellectual property and technology would lead to the demise of many smaller players and discourage new entrants with alternatives to foreign products and technology.

The Group of Ministers, convened by Meghalaya Chief Minister Conrad Sangma, includes members from eight states - West Bengal, Uttar Pradesh, Goa, Tamil Nadu, Telangana, Gujarat, and Maharashtra.

Among these states, West Bengal and Uttar Pradesh believe that a 28% GST should be imposed on all three activities based on the full face value of bets placed. Gujarat, however, suggests levying a 28% tax on platform fees.

Meghalaya suggested that a 28% tax should be imposed on GGR, platform fees, or commissions charged by casinos, online gaming, and horse racing. It also proposed creating a special mechanism, an "Escrow Account," to pool prize money for easier administration of the tax.

Goa recommended a 28% tax on the gross gaming revenue of casinos and an 18% GST on platform fees or service charges levied by platform operators. It also suggested treating contributions to the prize pool as supplies not subject to GST.

Tamil Nadu and Telangana suggested that if the GST Council determines that the three activities are not actionable claims of betting and gambling, a 28% tax should be levied on GGR.

Maharashtra, while suggesting a 28% rate for all three activities, argued that there should be no differentiation in taxation based on whether the activities involve skill or chance, and the valuation rules should reflect this. It proposed providing a suitable abatement for determining the taxable value of the actionable claim, which typically refers to a claim of debt.

Due to the differing views of the members, the Group of Ministers has deferred the final decision on the tax rate and valuation to the GST Council.

In its initial report submitted to the GST Council in June 2022, the Group of Ministers recommended a 28% GST on the full value of bets placed. However, in the 47th GST Council meeting in June of last year, Goa raised reservations about the report, and other states also requested a review.

As a result, the GST Council asked the Group of Ministers to reconsider all the issues raised in the report. Subsequently, the Group of Ministers met three times, conducted field visits, and engaged with industry stakeholders to gather more information and perspectives.