28% GST, coming to your nearest online games!
Do you like to bet? To gamble? Well, it is mostly illegal in India. But on the other hand, online gaming has picked up major pace in the country in the past few years. Companies now let you pick fantasy teams for your favourite sports matches, and the industry is growing so fast, that one of its leading players, Dream 11, is spending crores of rupees to become the lead sponsor for the Indian Cricket Team.
The GST Council of India, on 11th July 2023, decided to instate a 28% GST on online gaming, horse racing and casinos in the country. Apart from games of chance (betting), there is no respite for “games of skill” too (the fantasy gaming industry is also based on the fact that these games are not based on chance like throwing of dice but on the players’ skills).
The concerned companies came out to say that while it is an additional burden, there won’t be too much effect on their business. For example, Nazara Technologies stated that only 5 per cent of their business will be affected by the new tax. But the market reacted very aggressively to this news. The stock of Delta Corp. closed down 23% on 12th July while those of Nazara Tech and Onmobile Global fell roughly 8-13% intraday but closed at around -2.5% and -1% respectively.
But in many experts’ view, this step has endangered billions in investment and thousands of jobs in this up-and-coming sector. And it would definitely hurt the existing business in these industries due to increased GST being levied.
The 28% GST effectively means that if you go to a casino and buy Rs. 100 worth of chips, Rs. 28 would be levied on that. But, say you win Rs. 1000 using the initial money, there wouldn’t be any extra GST, you’d be paying Rs. 28 as GST still. But this could definitely reduce the revenues from these industries for these companies, since many people could say, “I don’t want to lose Rs. 28 even before I have done anything.”
Well, we’ll see what the eventual effect this step has on the industry in the coming years, but what do you think? Is this move justified? And do you think gambling should be seen in a more positive light in India, as it is in other parts of the world?
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