The Indian government will collect around Rs 75 billion by taxing online gaming companies in the fiscal year ending March 31, Reuters reported, quoting Revenue Secretary Sanjay Malhotra. This collection is nearly 4.5 times higher than Rs 16 billion collected in taxes in the previous fiscal year.
In the previous October-December quarter, the government collected Rs 35 billion by taxing online gambling companies. Furthermore, New Delhi will likely generate up to Rs 140 billion in goods and services tax next financial year ending March 31, 2025.
The Revenue Secretary also expressed his cautious optimism, stating that while the industry had stabilized, it was still too early to draw definitive conclusions. He added that a review of the online gambling tax framework would be conducted by April, though this did not necessarily imply changes to the tax rates.
In July last, the Indian government decided to levy a 28% tax on the full-face value of bets placed on online gaming, casinos, and horse racing. Finance Minister Nirmala Sitharaman said the decision will be implemented from October 1, 2023.
The 28% tax imposed on online gaming companies in India also sparked debate and concerns about its potential repercussions. For the government, the move is intended to align the tax rate more closely with other sectors and to generate additional revenue. But for the gaming companies, the decision was said to have significant repercussions as it puts an additional tax burden on them. With increased gaming costs, users could shift to unregulated offshore platforms, depriving the government of tax revenue and potentially exposing themselves to security risks.
According to a report by Deloitte along with Federation of Indian Fantasy Sports (FIFS), and as read on Business Today, the online gaming industry had grown to $2.6 billion in the financial year that ended March 2022. The industry was expected to reach $8.6 billion by FY27.
