TFS Gulf 
- The Indian government plans to collect $1.7 billion of GST from online gambling companies in FY25.
- Imposing a 28% tax on the online gaming industry could discourage its growth, investors fear.
GST levied on the online gambling industry
In October 2023, the government introduced a 28% tax.
The tax is imposed on the funds that online gaming companies receive from their customers for each bet placed.
Amount of tax the government plans to collect
The government is set to collect a staggering INR 14000 crores ($1.7 billion), in goods and services tax (GST) by the end of FY25.
Companies to be affected
The tax impacts various forms of online gaming, such as casino games, fantasy sports, and online lotteries, casinos, horse racing among others.
Plans to reduce gambling
The government justified the action by expressing worries about addiction.
The graph shows the Indian government’s projected collection of online gambling tax over three financial years.
Projected market growth
In 2024, the projected revenue in the Online Gambling market in India is expected to reach $2.90bn.
Furthermore, it is projected to have an annual growth rate (CAGR 2024-2028) of 6.49%, resulting in a projected market volume of US$3.73bn by 2028, according to Statista.
A decline in investments
Investors like Tiger Global and Peak XV, formerly known as Sequoia Capital India, put money into Indian gaming companies like Dream11 and Mobile Premier League.
The total investments in this sector had already surpassed $2.5 billion before the government announced the shocking news last year.
However, investments from foreign and local sources have steadily declined post-announcement.
Closing…
Online gaming companies in India already face a 30% TDS on their net winnings.
Now, levying a 28% GST could potentially hinder the growth of these companies, thereby impacting their future prospects.
