India: GST Council meeting fails to address iGaming sector's 28% tax rate concerns

The 53rd Goods and Services Tax (GST) Council meeting brought no relief for India's iGaming sector. Despite expectations for a revision of the 28% GST rate on online gaming and casinos, Finance Minister Nirmala Sitharaman confirmed the issue was not addressed.

“It wasn’t on the agenda. It didn’t come for discussion, it wasn’t taken up,” the FM said. She added that the council could not discuss half of the matters due to a lack of time and that there will be another meeting in mid to late August.

“While there were a lot of agendas, a considerable number was taken up today. Even as we concluded today, we acknowledge the fact that we have ready agenda points, which we could not take up today, for want of time. We will take them up in the next meeting,” the minister was quoted as saying in media reports.

This tax rate, imposed last year, has faced strong opposition from industry stakeholders, including gaming startups, industry bodies, and investors. They have urged the government to reconsider this decision.

In August, the GST Council approved amendments that came into effect on October 1, enforcing a flat 28% tax on the total value of bets placed in online games. This applies to both games of skill and chance. Previously, an 18% GST was levied on the platform fee charged for skill-based games.

The new tax structure has led to significant financial demands on online gaming startups. Show-cause notices for GST evasion amounting to Rs 1.12 lakh crore (approximately $13 billion) have been issued to 71 online gaming companies including Gameskraft and Delta Corp. The 28% GST tax is imposed on every player deposit made to all online gaming providers, regardless of whether it is horse racing or casino games.

Efforts by the private sector to propose taxing gross gaming revenue (GGR) instead of deposits have been unsuccessful. The new tax regime has forced major operators like NYSE-listed Superbet, the parent company of Betway, to exit the market. Others, such as FTSE100 Flutter Entertainment, which operates the Indian online Rummy room Junglee, are considering their next steps.

International and local businesses have expressed concerns that the revised GST levy and subsequent tax evasion notices are straining their operations, leading to mass layoffs and corporate restructuring.