The online gaming industry has made incredible strides in the last few years, with a monumental increase in the number of people who are now interested in online gaming for real money in India. In fact, the number of people who engage in some form of online gaming has increased from 250 million in 2018 to 400 million by 2020. With such exponential growth, it is no surprise that the Indian government has decided to reassess the online gaming laws in the country and perhaps introduce new laws regarding the GST policies that apply to the sector.
Even within the online gaming industry, the niche of real money gaming and other forms of online gambling has gained more scrutiny from the government. The government created a panel of several states’ finance ministers to work on a report about the taxation of casinos and online gaming. At present, the report is delayed and has not yet been submitted to the Finance Minister.
However, there is speculation that the group of ministers is possibly considering levying the highest rate of GST on casino and online gaming transactions. The highest rate of GST, which is 28%, is usually reserved for “sinful consumption”. The Internet and Mobile Association of India has claimed that skill gaming should not be equated with betting or gambling and should not be charged the rate of 28% GST.
Currently, the GST levied on the online skill gaming industry is 18% on the Gross Gaming Revenue and 0% on the Contest Entry Fee. However, increasing the GST to 28% would create a lot of financial pressure on the online gaming industry and would also inevitably end up affecting the users’ experience.
Will this affect the sports betting industry in India?
For now, the online sports betting industry will not be affected by this possible change in GST laws. This is because the online sports betting industry is still not formally legalized or regulated by the Indian government. According to MyBettingSites.com, a reputable online betting guide, most betting sites that feature sports odds still exist outside the purview of the Indian federal law.
However, according to a report by Reuters, a government panel is mulling the possibility of a regulatory body for the online gambling industry in India. The report also discusses the need for federal laws that will formalize the entire industry. This regulatory body, if made, would not only decide the fate and running of Indian skill gaming brands but also make a decision about the access to foreign betting brands that many Indian users have begun using.
If such a law were to be made in the near future, and foreign sports betting brands allowed in India, they could also be levied a 28% GST by the regulatory bodies in India. Whether this will encourage or discourage foreign brands, remains to be seen.