Indian Online Gambling Industry Struggles as 28% GST Levy Remains Unchanged
India’s online gambling sector continues to face challenges after the 54th Goods and Services Tax (GST) Council meeting concluded without altering the controversial 28% GST on player deposits, a tax that has severely impacted the industry since its introduction in October 2023.
No Relief from High GST Rate
Despite repeated calls for relief, online gambling providers in India remain burdened by the 28% GST levy, which applies to all player deposits made for online gambling, casinos, and horse racing.
Prior to the hike in October 2023, the industry was taxed at a lower rate of 18%. The increased tax has sparked widespread discontent across the sector, with operators citing mass layoffs and severe financial strain as direct consequences.
Industry Proposals Rejected
One of the industry’s key proposals to mitigate the impact of the tax was to apply the 28% GST to gross gambling revenue (GGR) rather than player deposits.
This adjustment, they argued, would better reflect the economic realities of the business and reduce financial pressure on companies. However, this proposal has not gained traction with the government, leaving operators with no immediate relief from the current tax regime.
The effects of the tax hike on the broader economic landscape are also becoming evident. A report published by Ernst & Young (EY) and the US-India Strategic Partnership Forum (USISPF) highlighted that India’s gambling sector had attracted over $2.6 billion in investments in 2019.
However, since the 28% GST was introduced, the industry has seen a complete halt in domestic and global capital investment. This has raised concerns about the long-term viability of the sector, which once held significant promise for growth.
Government Justification for the Tax Hike
Despite the concerns raised by the industry, the government has justified the high tax rate by pointing to increased revenue from online gambling.
Nirmala Sitharaman, Minister of Corporate Affairs, explained during the latest GST Council meeting that revenue from online gambling had surged by 412%, reaching Rs 6,909 Crore (£628 million) in the six months following the implementation of the new tax threshold. The government views this increase as a success, reinforcing their decision to maintain the current tax structure.
