The expanding betting industry in India could face an escalated tax rate, following an agreement reached by legislators on Tuesday. The nation’s Goods and Service Tax Council, the governing agency tasked with making suggestions for the enactment of the Goods and Services Tax (GST), declared its endorsement of the implementation of a 28% goods and service tax, which will be put into effect for activities such as horseracing, casino gaming, as well as online betting.
This resolution will incorporate gambling undertakings into the GST and is foreseen to be imposed on the total value of the chips acquired by patrons or their funds wagered. Moreover, this augmented tax will not only influence games of luck but will also extend to games of skill.
As insisted by Nirmala Sitharaman, India’s Finance Minister and the chair of the Goods and Services Tax Council, the enactment of this new tax is consequent to a lengthy analysis process and deliberation. He elucidated that this tax will be instituted incorporating gambling undertakings, involving horse racing and online betting into the GST Act.
Besides the hike in the tax for betting activities, the Goods and Service Tax Council confirmed it has chosen to reduce the taxes on beverages and food items that are bought by cinema goers. It was decided to decrease the tax rate for these items from 18% to a mere 5%.
Potential Detrimental Impact of the Tax on the Gambling Sector
The government’s decision to impose this new gambling tax abruptly grabbed the focus of firms and institutions within the sector. They vehemently objected to it, cautioning that it might have a disastrous influence on the industry within the nation. The prosperous gambling sector in India has a valuation of $1.5 billion and has been successful in luring hundreds of millions in investments.
The betting industry has cautionary words that this potential augmentation in the tax could lead to a disastrous influence on the sector, resulting in a loss of jobs, investment reductions, and customers turning towards the black market.
“We consider this decision by the GST Council to be unconstitutional, illogical, and outrageous.“
Roland Landers, CEO of The All India Gaming Federation
Roland Landers, The CEO of The All India Gaming Federation, as cited by Deccan Herald, opposed the Council’s decision to enhance the tax on grounds of being irrational and unconstitutional. “This decision blatantly disregards over 60 years of established legal jurisprudence and categorizes online skill gaming along with gambling activities,” he commented. In addition to this, Landers warned of how the increased tax could potentially lead to the loss of hundreds of thousands of jobs, and predicted that sub-legal offshore operators alone would benefit from this revision.
Ankur Gupta a practice leader specializing in indirect taxes at SW India expressed his concern regarding this new imposition. He predicted that this new tax rate of 28% on the gambling sector would be a significant “disadvantage for Indian players.” In line with this argument, it is yet to be ascertained if the lawmakers will enact further alterations considering the industry’s backlash.
