India’s GST Council is contemplating hiking the Goods and Services Tax (GST) on online gaming from 18 percent to 28 percent. The same rates would apply to casinos and racetracks.
The potential move is setting off protests from the nascent online gaming industry, who say it could have the effect of strangling the new industry before it even gets off the ground.
The GST Council met on June 29 to consider the proposal, but postponed action for two weeks. It has asked the Group of Ministers to give the issues another look based on reaction from the states and submit a report by July 15.
Jaydeep Chakravartty, an international iGaming consultant, last week wrote in Asia Gaming Brief: “The main issue is that the proposal on the table is to levy the tax on the entire contest entry amount rather than gross gambling revenue. This would nip the potential of the entire industry in the bud, making businesses unviable.” He added, “The proposal in its current form would slow down the expansion of online gaming companies and force fantasy sports operators to provide smaller prize pools, which will force their loyal customers to leave the platforms in pursuit of greater returns.”
The All India Gaming Federation (AIGF), the E-Gaming Federation (EGF) and the Federation of Indian Fantasy Sports (FIFS)—which represent 90 percent of India’s online gaming market—have issued joint statements declaring the tax would be “catastrophic” for the industry.
The online gaming industry is expected to grow from $1.54 billion this year to $5 billion by 2025. India could become a leading gaming market in the world. India’s Prime Minister Narendra Modi recently said, “the gaming market is huge internationally and the number of youth connected to this market is increasing” globally.
