India’s gaming community has lauded the decision of the Supreme Court to undergo a review over whether the Goods and Services Tax (GST) tax can be applied to retrospective activities.
A backdated tax would intensify a market that is already blighted with a significant tax burden and increased challenges for operators seeking to find profitability.
Heading into the new year, there was no sign of movement of the 28% GST levy applied to all deposits, which fuelled the departure of many of the bigger players from the market.
One of the key departures was Superbet, with the firm revealing as it left that the tax rules make the Indian market no longer commercially viable.
However, as the government embarks on a consultation period around backdated and the current tax rates felt by operators, Anuraag Saxena, the CEO of the industry body, the E-Gaming Federation (EGF), praised the decision to extend the timeline of the government as a “progressive resolution” is essential.
According to MoneyControl.com, she stated that the decision for a review is “a win-win, both for gaming operators who were facing coercive action, and the government whose timelines may now be extended”.
She added that “regulatory clarity will be pivotal in fostering an environment where the industry can create over 5 decacorns and 10 unicorns within the coming five years, driving significant value for Indian markets and global investors.”
The eye-watering tax rates have also led to the increasing prevalence of the unlicensed market, with a recent report from the Advertising Standards Council of India (ASCI) detailing just how much of a strong presence illicit gambling operators have on social media platforms.
The ASCI highlighted illegal offshore betting as a continuous “major concern” for the regulator, with a total of 890 ads being reported to the Ministry of Information & Broadcasting (MIB) – constituting 29% and taking second place from the total 2830 illegal adverts processed between April and September 2024.
Any easing to the tax burden in India will be seen as a benefit to the efforts of the regulated sector when it comes to combatting the surge of the black market.
The case has also been lobbied by the industry that taxes should be implemented on gross gaming revenue as opposed to user deposits – to allow for an industry that is profitable and can accommodate players.
iGaming Expert Analysis: Coercive back tax for the Indian gaming industry could further cripple a market that is already awash with an abundance of challenges for operators. There is monumental potential for the iGaming market to serve and boost the economy, however it currently remains untapped as a result of the onerous framework applied to the sector.
