Online Gambling Industry Eyes GST Cut from Next Government

15 Apr 2024 , 01:52 PM

Following the general elections, the online gambling industry intends to approach the incoming administration to request a reduction in the Goods and Services Tax (GST). Rather than using the entire face value, they suggest basing the tax on the Gross Gaming Revenue (GGR). The premise of this plan is that entrepreneurs in the industry cannot afford the high tax rate that is in place at the moment. This information was supplied by a person with knowledge of the situation.

“The sector will lobby the incoming administration to reconsider the 28% GST on full face value of online gambling after the elections. With a 28% GST on face value, the industry cannot survive. The premise of this plan is that entrepreneurs in the industry cannot afford the high tax rate that is in place at the moment.

“The sector will lobby the incoming administration to reconsider the 28% GST on full face value of online gambling after the elections. With a 28% GST on face value, the industry cannot survive. The industry would cease to function as a startup ecosystem. Because of the enormous levy, only larger players will be able to survive due to the high tax rate,” the report said.

Starting on October 1, 2023, full face value GST will be applied on online gambling, as opposed to GGR. The difference between the amount wagered and the amount won is known as gross gaming revenue, or GGR. Online gambling revenue has grown five to six times since October 1st, from ₹200 crore to ₹1100 crore per month.

Before October 1, 2023, the industry was increasing at a rate of more than 20% annually. Even with the GST calculated on GGR, the same monthly revenue of ₹1100 crore can be achieved in six years at this growth rate. However, the industry will expand and be able to rival offshore gambling firms that aren’t registered in India, the source added.

“The offshore gambling businesses, which are not even registered in India, are a greater nuisance. The massive tax revenue avoidance and financial outflows caused by the offshore gambling enterprises, he claimed, will hinder the expansion of domestic companies and render them unsustainable.

The online gaming market in India is projected to be worth $2.5 billion, whilst the global market is valued at $159 billion. According to reports, 114 illegitimate betting and gaming websites are active in India, according to the government.

Numerous offshore companies that pose as legitimate businesses engage in money laundering and gaming. These sites gather money in dummy accounts, which they subsequently move through cryptocurrencies, hawala, and other illicit methods.

According to a video released by news agency ANI on April 11, the online gaming businesses intend to depict the new government against the backdrop of a meeting between Prime Minister Narendra Modi and a small group of Indian gamers. In the video, Modi questioned the players about the problem of gaming being mistaken for gambling. In response, a player stated that it was about time that skill-based and real-money games were clearly distinguished from one another. Following the conversation, the Prime Minister was observed experimenting with a number of games on various platforms. He experimented with VR games, smartphone games, and PC/console games.

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