India to retain 28% Goods and Services Tax as state coffers significantly bolstered
Finance minister Nirmala Sitharaman confirms 412% surge in tax revenue from operators following policy change implemented last year
India is set to retain its 28% Goods and Services Tax (GST) on gambling after state coffers were significantly bolstered following the measure’s introduction.
On 1 October 2023, India hiked the tax rate from 18% to 28%, with Minister of Finance Nirmala Sitharaman confirming it has resulted in a 412% increase in tax revenue to the sovereign state.
Speaking following the 54th GST Council Meeting yesterday, 9 September, Sitharaman revealed tax revenue had reached ₹6,909 crore (£628m) in the first six months of the new rate being in effect.
In the six months prior to the tax hike coming into play, the state took just ₹1,349 crore in comparison.
Sitharaman specifically noted a 30% increase in revenue from online casino operators, with the post-implementation period returning ₹164.6 crore to ₹214 crore.
The finance minister said: “We had taken this decision on the casinos, online gaming and horseracing, and at that time, we said, after the notification and [six months] after its implementation, we will come up with a status.”
When asked by a reporter if there was any chance the government could return to a lower tax rate, Sitharaman added: “The [GST] Council heard the facts, and that’s where it was left.
“It was more a presentation of the current situation because that was a promise given that after six months we’d review. It is more than six months now, but we’ve given a picture.”
Betway parent company Super Group exited the Indian market last year following the tax hike.
Speaking to EGR in January, Super Group CEO Neal Menashe said: “We have to make calls when we’re not seeing returns. It is uneconomical to have GST at 28% of deposits; no gaming business in the world can make money like that.”
A report from strategy consultancy firm EY, published in June, called for a switch in tax model to one based on GGR rather than deposits.
EY said: “The recent amendments to the GST law have had a hugely significant impact on online skill gaming platforms.
“These changes have rendered the sector almost unviable for emerging companies, significantly stifling innovation. Moreover, the question of expansion for existing startups has become a serious concern.
“Established companies specialising in skill-based online money games are struggling with attracting foreign direct investment. Many have been forced to downsize and have experienced a sharp decline in revenue growth.
“By implementing [a GGR tax], policymakers can pave the way for a thriving and resilient online gaming industry that not only contributes significantly to India’s economic growth but also elevates its stature as a premier destination for gaming innovation and investment.”
Image credit: Ministry of Finance (GODL-India)