India's iGaming sector expresses concerns over potential chilling impact from recent tax regulations.
The Indian government is causing anxiety in the country's online gaming industry with its plan to impose a 28% tax on revenue generated by these companies. This decision has been made by the Goods and Services Tax Council, which consists of federal and state finance ministers. The council also confirmed that there will be no distinction between a "game of skill" and a "game of chance," effectively closing a loophole that previously allowed fantasy sports companies to justify their offerings as skill-based.
This development has received a strong response from the iGaming industry, with Roland Landers, CEO of The All India Gaming Federation, calling it "unconstitutional and irrational." He went on to say that the decision would destroy the entire Indian gaming industry and benefit only illegal offshore platforms. Aaditya Shah, COO of gaming app IndiaPlays, has shed some light on the impact this tax will have on the industry, stating that it could disrupt companies' cash flow.
The government argues that online gaming companies have paid very little tax on the fees they charge for real-money games, justifying the tax hike. Finance Minister Nirmala Sitharaman insisted that the move wasn't intended to hurt the industry but rather increase transparency.
The online gaming industry in India is experiencing significant growth, with a current valuation of around $1.5 billion and a predicted growth trajectory. The country is home to approximately 659 million smartphone users, and experts are forecasting that the gaming market will reach $8.6 billion by 2027. India is also the world leader in game downloads, with 15 billion in 2020, more than the US and China combined. There are over a thousand gaming startups in India which are attracting both domestic and international investors.
The government cited other reasons for its tax decision, namely concerns over financial losses and potential addiction. Sitharaman explained: "Our intention is not to end online gaming, casino, or horse racing. But all these have become so complex that go this route or go that route, each route has transparency to a certain extent, but after that, it is opaque."
Despite the government's explanations, the online gaming sector has been fired up by this decision - several industry professionals have expressed their concerns that the tax hike will hinder the industry's growth and potentially create a boom for black-market operators. Malay Kumar Shukla, Secretary of the E-Gaming Federation, summed up their fears by saying, "A tax burden where taxes exceed revenues will not only make the online gaming industry unviable but also boost black-market operators at the expense of legitimate tax-paying players, further undermining the industry's image and capacity to survive."
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Source: www.casino.org
