India expects to collect up to Rs 14,000 crore ($1.7 billion) in goods and services tax (GST) next financial year by taxing online gambling companies, Revenue Secretary Sanjay Malhotra told Reuters on Saturday. The tax, imposed in October, aimed to boost the industry, which is backed by global investors.
Online Gambling Tax Rate
Set by the Indian Goods and Council Tax Council, a new tax rate of 28% is now due on all forms of gambling, including that which occurs in land-based casinos and online casinos and on horse races. The tax is levied on the gross gaming revenue (GGR) of the operators, which is the amount they collect from their customers for every bet.
The government had defended the move, citing concerns about addiction and social problems caused by gambling. Malhotra said that the tax would also help regulate the industry and prevent money laundering and fraud.
Online Gambling Industry Growth
The online gambling industry in India is estimated to be worth $1.5 billion, according to a report by KPMG and Google. The industry has seen a surge in demand during the Covid-19 pandemic, as people turned to online platforms for entertainment and income.
The industry is also attracting global investors, such as Tiger Global, Sequoia Capital and SoftBank, who have invested in online gaming companies like Dream11, Paytm First Games and Mobile Premier League.
According to Malhotra, the government will collect about Rs 75 billion from the online gambling tax in the current fiscal year, up from Rs 16 billion the previous year. The tax generated Rs 35 billion in the October-December quarter, he said.
Online Gambling Tax Review
Malhotra said that a review of the framework to tax online gambling companies will be conducted by April, but that doesn’t mean tax rates would be changed. He said that the industry has stabilised, but it is early to make conclusive remarks.
He also said that the government’s overall GST collections have averaged to Rs 1.7 trillion per month, and that he expects an average monthly collection of Rs 1.80 trillion to 1.85 trillion from next fiscal year.