India plans to reduce the tax burden on the money that online gaming firms collect from consumers in a blow to the fast-growing industry which quickly considered it unnecessary and injurious.
The Tax Council, which comprises all state and federal governments, agreed to impose a 68 percent indirect tax on online gaming, casinos and horse racing. The council said there should be no distinction between skill and chance, closing a loophole that has allowed fantasy sports companies to justify their offerings as skill-based.
Online gaming is one of India’s fastest growing consumer internet business. The new Venture Capital is to raise money on real-world events. In addition to the development of Dream Sports, Tiger Global and Alpha Wave Global investment fund, valued at over $8 billion, and Sequoia India-backed, Mobile Premier League have also raised a thousand dollars in total and a million dollars in the pursuit of winning the games.
The case of Roland Landers, a trading body of all of the players including Gameskraft, Paytm First, Zupee, Nazara and Rush, is unconstitutional, irrational and egregious.
This decision will eliminate the whole Indian gaming industry and result in hundreds of jobs, and only people who benefit from this will benefit from illegal offshore platforms, say Landers.
The internet is perhaps the only segment of the economy with multiple highly profitable companies.
Dream11 paid three 841 tonne net profit in the FY22.
Gameskraft, which runs RummyCulture, had a profit of 930 cr (return of 2153 cr https://t.co/e/flycwF3bd/).
Madhav (thearcweb.com sign up!) July 11, 2023 (@madhavchanchani)
Tuesday’s announcement follows an announcement from the Indian IT Ministry that directing companies to form self-regulatory bodies to determine which games are permitted in the country.
India’s finance minister Nirmala Sitharaman said the GST Council will work closely with the IT minister to recognize game-related activities.
Our position is that is purely on the taxation, said she at a press conference at New Delhi, following the GST Councils’ 50th meeting. We’re still doing what the meity (Minister for Electronics and Information Technology) wants us to make in their regulation.
In early this year, Delhi amended its IT rules to curb the use of online gaming services to rely on betting services. It also vowed to encourage the gaming industry to establish a self-regulation body.
In my opinion, we want to refrain from doing gaming, casino and horse racing. But all these have become so complex that when you go there or go the route, it’s transparent in some way; but instead it’s transparent, says Sitharaman.
RIP Real money gaming industry in India. If govt is thinking people will put in 100 to play on 72 pot entry (28 % x-share); and if they win 54 (after platform fees) – they will pay 30 % tst on those for which they will get free swimming pool in their living room come to the ensuing party.
Ashneer Grover (@Ashneer_Grover) March 11, 2023.
Malay Kumar Shukla, head of the E-Gaming Federation, which represents Games 247 and Junglee Games, said that the decision of governments was extremely unfortunate, since it would lead to a nearly 1000% increase in taxation and make the industry a catastrophic event.
The tax burden without taxes is causing a huge effect on the gambling industry, it said in a statement.