An Indian tax panel on Wednesday decided to move ahead with the goods and services tax on online gaming and casinos, approving the rules for its implementation.
Taxes will apply from from Oct. 1, but will be reviewed after six months, said Finance Minister Nirmala Sitharaman after a virtual meeting of the Goods and Services Tax Council in New Delhi. She also said the levy will be at the entry level only.
The tax panel last month imposed a 28% levy at entry points on full face value for online gaming, casino and horse racing, paving the way for a uniform rate on games of skill as well as games of chance.
Following the announcement, over 100 online firms sought changes, asking for the tax to be levied on platform fees charged by companies to users to avoid an impact on volumes.
A young population coupled with cheap Internet access fueled growth of online games, including fantasy sports, poker and rummy. With a user base of 180 million people, revenues in the online gaming industry grew 34% last year to $1.6 billion and are expected to rise to $2.8 billion by 2025.
Investors including Sequoia’s India wing Peak XV Partners, Tiger Global and Tencent have significant investments in online gaming companies such as Dream11, Games 24x7 and Mobile Premier League.
“28% GST on online gaming could be a damper for the industry” said Divakar Vijayasarathy, founder and chief executive officer of DVS Advisors and added, the nascent industry has enormous potential to create jobs.
