India’s online gaming industry hit with 28% tax

By Daisy On Jul 12, 2023

The government on Tuesday said it would impose a 28% tax on funds that online gaming companies collect from their customers, in a setback to the $1.5 billion industry, which could lead to higher ticket prices.

Gaming apps are often endorsed by sporting heroes in India, where cricket is a national passion, but concerns have mounted over possible addiction and financial losses.

International investors have also been drawn to the industry, with Tiger Global backing Indian gaming startup Dream11, the lead sponsor of India’s national cricket team.

Finance Minister Nirmala Sitharaman, who chairs the goods and services tax (GST) council, comprising state finance ministers, said the decision to tax online gaming was reached after extensive discussion.

Industry executives said they may have to pass on taxes by raising the ticket prices of games.

“The implementation of a 28% tax rate will bring significant challenges to the gaming industry. This higher tax burden will impact companies’ cash flows,” Aaditya Shah, chief operating officer at the gaming app IndiaPlays, said.

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Roland Landers, CEO of The All India Gaming Federation, said the decision was “unconstitutional (and) irrational”.

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