The GST Council decided to charge a 28% tax on online gaming, casinos, and horse racing. This tax will be applied to the full face value of the bet, regardless of whether the player wins or loses. This means that a 28% GST will be levied on the total amount of money that is wagered on online casinos, regardless of whether the player wins or loses. The bet amount placed will be considered as the value of supply.
This is a significant increase from the current rate of 18%, and it is likely to have a number of implications for the industry.
Is it a Potential Threat to the Online Casino Industry?
The Indian gaming market is expected to grow significantly in the next few years. It is estimated to reach $5 billion in 2025, up from $2.8 billion in 2022. The decision to levy a 28% GST on online gaming has been met with mixed reactions. Some people believe that the tax is justified, as online games are a form of gambling and should be taxed accordingly. Others believe that the tax is too high and will discourage people from playing online gaming, casinos, and horse racing.
There is NO Impact of the 28% GST on online casinos. The 28% GST is applicable only on landbased casinos (Goa, Sikkim, Meghalaya, Daman and Diu). Some of the potential impacts include:
- Decrease in the number of players: The high tax rate could discourage some people from playing online games. This could lead to a decrease in the overall number of players in the industry.
- Decrease in the amount of money wagered: The high tax rate could also lead to a decrease in the amount of money that is wagered on online casino games. This could have a negative impact on the revenue of online casinos.
- Shift to Online casinos games: Some players may choose to play at offshore online casinos that do not charge GST. This could lead to a loss of revenue for Indian online casinos.
- Increase in illegal gambling: The high tax rate could also lead to an increase in illegal gambling. This is because people who are looking to gamble may be more likely to turn to illegal gambling if the legal options are too expensive.
The 28% GST on online games is a significant change for the industry. It remains to be seen what the long-term impacts of the tax will be. However, it is clear that the tax has the potential to have a significant impact on the industry.
GST on Online Gaming and Real money Gambling in India: What You Need to Know?
In simple terms, the value of the bets placed will be considered as the basis for taxation. This means that the total amount wagered, known as the pool amount, will be subject to taxation, rather than the commission earned by companies.
To illustrate, let’s take an example:
- Suppose the total bet value, or the pool table size, is ₹1,000.
- The commission earned by the gaming company is ₹200.
- The final amount paid to the winner after deducting taxes (TDS) is ₹800.
In this case, the Goods and Services Tax (GST) liability will be calculated based on the total bet value of ₹1,000, at a rate of 28%.
Revenue or Repression?
The GST Council has said that the revenue generated from the tax on online gaming, casinos, and horse racing will be used to fund social welfare schemes. However, it is unclear how much revenue the tax will actually generate.
Only time will tell what the true impact of the 28% GST on online gaming, casinos, and horse racing will be. However, it is clear that the tax has the potential to have a significant impact on the online casino industry in India.
Overall, the new GST rules are a significant setback for the online gaming industry in India. The increase in costs and the complexity of the regulations are likely to have a negative impact on the industry, and it is possible that some companies may choose to exit the market altogether. But it would be great news for online casino operators in India as they are expected to attract a large player base that may shift from online casino games, including fantasy sports.
However, it is also possible that the industry will adapt to the new rules and find ways to continue to grow. Again emphasizing, only time will tell what the long-term impact of the new GST rules will be on the online gaming industry in India.
Hi guys, I am Faizan, an online casino game enthusiast with over 5+ years of experience. I am passionate about online casino games, and my sole motive is to provide you with all the trustful information regarding online gambling in India. I love to play slots, RNG, and Live Casino games.
My articles have been featured in Cricket Addictor, East Mojo, 1883 and The Bridge.
