The online gambling industry breathed a sigh of relief after
the government's group of ministers (GoM) decided not to mix online gaming with
horse racing and gambling. In July, the GST Board decided to raise the tax in
the region from 18% to 28%, which the company agreed with. Currently, 18% GST
in the sector is applicable to the gross gaming revenue (GGR). However, the GoM
considered adding it to the Gross Game Value (GVV), which is the value of bets
placed by players. In online gambling companies, players pool their money to
create a pool, which is used to pay out winnings. The difference between these
combined deposits and winnings is GRR. Industry experts and activists are
concerned that imposing a 28% GST on GVV will double the tax the industry will
pay and force some businesses to close.
India's online gaming sector is expected to reach $5 billion
by 2025, according to a report from BCG and Sequoia India. However, while
unicorns like Dream Sports and Mobile Premier League have emerged, the industry
is still in its infancy.
The GoM was set up in May to review GST on online gambling,
gambling and horse racing. In its last meeting, which was held on September 5,
it decided to approach the corporate body and get legal advice before
submitting the final report on the introduction of new GST rates. It has also
been decided that online gaming will not be used for gambling and horse racing,
which means that everything will be taxed. Roland Landers, president of the All
India Gaming Federation (AIGF), an industry body for online gaming, said,
"The GoM recognizes the gap in legal and regulatory frameworks that online
gaming guarantees. Landers said the industry is hopeful It is expected that the
GoM will issue "progressive and legally binding recommendations on the
rate and level of online gambling".
Rohit Agarwal, founder and CEO of sports marketing company
Alpha Zegus, also said that it makes sense to leave sports and gambling and
horse racing. "They all have different economies, operating systems and
profit margins. It makes sense that they are taxed by their standards," he
said. In July, the GOM proposed a single 28% GST across all three regions,
which the agency criticized and issued various judgments that recognized online
games as free games, rummy, etc. like art games. Jay Sayta, a well-known
technology and sports lawyer in the industry, agreed that the GOM's final
decision was a welcome one. However, he lamented that the delay in finalizing
the report had created uncertainty in the sector. It is hoped that the GoM will
make a decision soon and introduce a tax of Gross Gaming Revenue (GRR) as is
done in many international markets.
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