India’s iGaming Industry Faces Backlash Over Looming 28% Tax

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The announcement of a groundbreaking 28% tax on India’s burgeoning iGaming industry slated to debut on the first day of October has met a chorus of sharp criticism. The Goods and Services Tax (GST) Council unveiled this contentious plan last July, igniting a fiery backlash from industry stakeholders.

Over a hundred gaming firms and fiscal entities, Tiger Global and Peak XV included, have filed pleas to the government, imploring it to revisit the decision. The critics collectively consider this 28% taxation proposition a downright existential menace to the sector.

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In an August sit-down, the GST Council agreed to maintain the possibility of scrutinizing the tariff half a year following its enactment, yet they remained resolute in their commitment to the imposition of the tax. The council also detailed the appraisal rules for this levy, pointing out online gaming would be taxed based on the absolute value of all wagers placed in online gaming, casinos, and on horse racing.

Nirmala Sitharaman, India’s Finance Minister, asserted the intention was not to sabotage the sector but rather to seal a loophole thereby obliterating any distinction between a ‘game of skill’ and a ‘game of chance’.

The Indian online gaming expanse is presently pegged at approximately $1.5 billion, making it one of the country’s speediest expanding consumer internet enterprises. The forthcoming implementation on October 1st was preceded by the Indian government making it mandatory for foreign online gaming firms that operate within the country to register the business locally as well as designate a representative to handle taxation on customer funds.

Online gaming firms from overseas will face a blockade if they default, as per the GST Council. “Offshore online gaming companies will not be granted any tax privileges and must conform with local counterparts,” warned Rajat Mohan, a partner at AMRG & Associates.

Last month, Mobile Premier League, an Indian gaming app, announced plans to retrench 350 staff members, labeling it as necessary steps to weather the tax storm dished out by the government.

Meanwhile, reports indicate a significant suspension in hiring practices within this fast-growing sector. Over 1,000 gaming startups within India have shown marked growth, drawing in both domestic and foreign investors. Due to the looming tax imposition, staffing enterprises and job portals are witnessing drops in job listings by both established companies and startups.

Despite the fierce opposition, the government staunchly believes the tax is merited, asserting that companies have until now paid quite negligible tax on the fees charged for providing real money games.

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