A flat 28% turnover tax has been set by India’s Goods and Council Tax Council (GST) for internet gambling, casino gaming, and horse racing betting. India Betting Tax
The Announcement was made during the GST Council’s 50th GST Council meeting.
Although the GST has not specified a start date, existing laws will need to be changed to accommodate the tax.
The new tax will be based on turnover rather than gross gaming revenue (GGR) and will be charged to the entire face value of bets.
In essence, the operator will pay Rs28 in tax for every Rs100 (£0.93/€1.08/$1.22) that a customer spends.
The whole value of any bets placed with operators in the case of online betting will be taxed.
The tax will be charged on the face value of the chips purchased at each location for land-based casinos. Tax will be levied on the full amount of bets placed with bookmakers and totalisators for horse racing.
Turnover or GGR tax
In response to a second report from a group of ministers (GOM), the tax rates have changed. This was submitted ahead of the 50th GST Council meeting last week and addressed difficulties with betting taxation.
This came after the GST requested a follow-up research after an earlier report was provided with it in June 2022.
In its most recent report, the GOM came to the conclusion that the GST Council should decide whether to impose the 28% tax on GGR or turnover.
In the end, the GST preferred full-face value to GGR.
The GST council, which consists of the Union Finance Minister and members from all Indian states and union territories, has the authority to decide on tax rates, exemptions, and administrative procedures.
AIGF claims the tax rate is “extremely detrimental”
The All India Gaming Federation (AIGF), the leading trade association for online betting in India, responded negatively to the news.
The AIGF stated the rate will make it more difficult for firms to survive in a statement. It was also mentioned that more gamers would start using unauthorized operators as a result.
This decision will be extremely detrimental to the entire Indian gaming industry, with the GST on deposit increasing liability upto 400-500%, and will lead to lakhs of job losses.
At this valuation of taxation, companies will be paying more in taxes than they will be generating in revenue. Gamers will inadvertently, veer towards gray market operators that have been providing services illegally in India. This will stifle competition, hinder innovation, and impede the growth potential of the industry.
The implementation of the Council recommendation will disproportionately impact the large number of MSMEs and startups. It will make it challenging for them to survive.the AIGF said.
Betting regulations in India
The second significant change to the Indian online gaming business this year is the new tax rate.
The Indian government released a new set of guidelines in January to control internet gambling.
The revisions provide that no online game offered may be unlawful under any applicable laws. State-wide bans on betting are among them.
The reforms propose self-regulatory entities rather than creating a government regulator. These would make up online gaming businesses and be in charge of creating regulations for the sector.
Protecting players from damage, dealing with addiction, preventing financial crime, and protecting minors are some of these organizations’ primary priority areas.
An industry, sports, or entertainment representative, a player representative, a consumer education or psychology specialist, and a government-nominated public policy expert should all be included on all committees.
The government could take action to enforce compliance should the body fail to establish enough standards. The registration of such a body might then be suspended, if necessary.
Source: iGB India Betting Tax