SUMMARY
- GST from online gaming surged 412% to INR 6,909 Cr with the new 28% tax.
- The new tax led to job cuts and closures in the gaming sector, with over 50% of firms seeing revenue declines.
- Real-money gaming makes up 83–84% of India’s gaming income, with 90 million paying users.
Finance Minister (FM) Nirmala Sitharaman stated that in the first half of the year following the implementation of the 28% GST regime, the goods and services tax (GST) collection from India’s online gaming business increased 412% to INR 6,909 Cr against the previous half of the year. Speaking with the media following the 54th meeting of the GST Council, the FM stated that the amount of GST received from online gaming increased five times between October 2023 and March 2024, from INR 1,349 Cr in April through September of 2023.
“The new GST regime was decided upon for casinos, internet gaming, and horse racing, and we stated at the time that we will provide an update six months later. The Council was given such status,” stated Sitharaman.
The finance ministry announced that online gaming, horse racing, and casinos would be treated as “actionable claims” under the GST Act, similar to lottery, gambling, and betting. This meant that a 28% tax on the full face value of bets for real money gaming would be imposed, regardless of whether a game is skill-based or chance-based. Needless to say, the imposition of this tax caused a stir in the nation’s real money gaming industry, with companies like MPL, Hike, and Spartan Poker firing staff members and Fantok and Quizy closing their doors as a result of the new regime.
In June of this year, a survey by EY and the US-India Strategic Partnership Forum (USISPF) revealed that over 50% of Indian online gaming enterprises experienced a decline in revenue or stagnation following the implementation of the new regulations. The Center, meanwhile, is optimistic about increasing India‘s gaming potential. It is important to take into account that a large portion of India’s gaming economy comes from the real money gaming sector. It has unicorns such as MPL, Dream11, and Game24X7.
A Grant Thornton analysis states that there are around 90 million paying players among the 100 million daily online gamers in India’s real money gaming market. The research stated that it accounted for 83–84% of the total income in FY22, making it the largest contributor to the Indian gaming industry.
