28% GST Hopes to Deter Online Gaming

In order to put the brakes on online gambling in the nation, a Group of Ministers formed by the Mistry of Finance are now looking to increase tax rates and possible deter the alarming rate at which online gambling is growing.

The GST Council is expected to raise the tax rate on online gambling from 18 percent to 28 percent. The concerned Group of Ministers are expected to shortly propose a flat 28 percent GST charge on online gaming.

However, not all the details are clear just yet. A meeting is scheduled in the coming week and this is where the ministers will take a call on whether the tax will be calculated on the total Gross Gaming Revenue or if it will be taxed on a transactional level for each transaction. The meeting is to be chaired by Meghalaya Chief Minister, Conrad Sangma.

The Case for Skill-Based Games to be Exempted

On the issue of whether the tax should be levied on each transaction or the GGR, the online gaming industry has made it clear what it thinks. They are against the proposed plan to levy tax on the entry fee in addition to a 115% surcharge and they are of the opinion that the tax should be applied only to the GGR.

A few individuals have also spoken in favor of learning-based games and have voiced that the tax rates on these games should not be hiked any further than the 18% it is right now since these games do not constitute gambling or betting.

Rishabh Bhansali, one of the founding members of FanClash (eSports and Fantasy sports company), stated that the tax should only be on the GGR since that is the actual revenue the operators make. If tax is levied on each transaction, then running such services will become financially unviable. He also wants the decision-makers to consider drawing a distinction between games of chance and games of skill. The latter should not be taxed at 28%, added Bhansali.

Abhay Sharma, CMO of MetaOneVerse, a cryptocurrency-based blockchain game firm, had similar sentiments. Mr. Sharma stated that one of India’s fastest growing sectors is online gaming. However, we are seeing the introduction of batting, gambling, and horse racing into sports.

These are not the same as skill-based games. The government must distinguish between the types of gambling that will be subject to the new GST rates. He made it clear that he was of the opinion that skill-based games must be exempted from the proposed 28% tax.

The Current Gaming Tax Rates and the Growth of Online Gaming in India

The tax rate borne by online gaming sites is now 18 percent for each game that does not include betting or gambling. On online games involving betting or gambling, the GST rate is 28 percent. For horse racing bets, a 28% tax is applied on the total bet amount.

Undeniably, online gambling is experiencing exponential growth in India, and it’s showing no signs of slowing down. With many new operators sprouting out on a monthly basis – many of which feature on IndiaCasinoClub, it’s easy to see why potential concerns may arise when it comes to problem gambling.

Because of increased internet penetration and the availability of smartphones in addition to personal computers and tablets, the online gaming business has experienced an increase in user base in recent years. With over 560 million internet users, India is a rapidly expanding market for online gaming.

In India, mobile phone users account for 85 percent of the market, with PC users accounting for 11 percent and tablet users accounting for only 4 percent. The online gaming business is primed for further expansion with such a large user base.

According to a survey, study player such as Dream11, the country’s first gaming unicorn company, Mobile Premier League, Nazara and others would likely dominate India’s gaming market.

As per estimates, the Indian esports sector will generate $175 million in total revenue by 2023.

According to 2021 KPMG research, the number of online gamers in India increased to over 400 million by mid-2020 from around 250 million in 2018, and this made it second to only China in terms of total number of online gamers.Another report claimed that the country’s online gaming business is estimated to reach $3.9 billion by 2025.

The Legal Status of Online Casino Gaming in India

In India, there is no central law prohibiting online casino gaming.It is up to each state to determine whether or not to make gambling illegal. Only a few states have outright banned internet casinos thus far.With the exception of a few states, this implies that internet casinos are allowed across India.

Andhra Pradesh and Telangana were the first two states to prohibit internet gambling.

Assam, Sikkim, Nagaland, Odisha, Telangana, and Andhra Pradesh are the states that have banned the game as of today. This prohibition only applies to fantasy sports betting apps like Dream11 in these states. Karnataka had previously outlawed all forms of internet gaming, including wagering, betting, and gambling in any manner, but a high court judgment partially removed the prohibition for specific types of games.

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