In a blow to India’s online gambling industry, in a meeting Tuesday, the Group of Ministers (GoM) in New Delhi has agreed to impose a 28 percent goods and services tax (GST) on online gaming companies, casinos and horse racing.
The council also agreed games of skill and games of chance would not be differentiated. The effective date for the 28 percent GST levy on online gaming will rollout after amendments to the GST law.
Finance Minister Nirmala Sitharaman said the decision was taken after consultation with states, and that there was no intention to harm the industry.
However, industry representatives have warned that the extra charges were likely to be passed on to customers.
Gaming companies opposing tax on online games have told The Times of India it would be “extremely detrimental to the survival of the online gaming industry as no business operations can survive with such high taxation.”
The ministers have also been discussing imposing an 18 percent tax on platform fees for online gaming in Goa.
Some of the biggest online gaming companies have argued against the 28 percent rate hike directly with the Central Board of Indirect Taxes & Customs (CBIC).
According to Siddharth Sharma, SVP, Business Strategy, Head Digital Works: “The new tax rate of 28 percent on Gross Gaming Value is an unexpected move by the GST Council, which will have far-reaching consequences for the industry and question its basic viability. Not only will this burden hinder the growth of this nascent industry, its application will compress new innovation and opportunities.”
“Businesses have a legitimate concern that this move will push users towards illegitimate betting and gambling operators that don’t follow the laws of the land,” he said.
