Many stakeholders in India’s various economic sectors are optimistic about the prospects that the year may unfold. One such sector is gambling, where the sector’s online casino markets are estimated to earn a revenue of INR 0.93 billion in 2024. Experts predict India’s online casino market to show an annual growth rate from 2024 to 2028 by 5.45%.
Given the industry’s popularity in India, the Centre continues making efforts to ensure the industry is regulated. In October last year, the Centre implemented the 28% Goods and Services Tax (GST) rate on India’s online gambling sector. The tax’s implementation marked yet another attempt from the government to control the lucrative industry.
The tax’s implementation was part of the amendments to GST laws in the Lok Sabha to further impose taxation on many gambling practices in India, such as horse racing, casinos and online gaming.
On the matter, the Centre said the taxation would provide clarity to how these gambling practices accrued their profit. The GST Council then recommended the insertion of specific provisions in the 2017 GST Act to ensure compliance from stakeholders in the gambling industry.
The council also suggested valuing actionable claims and online gaming in casinos based on the payable or paid amount by or on behalf of the player to the supplier. Upon effect, thetax is applicable for all gambling activities regardless they are games of chance or skills.
The decision to impose the tax came from the fact that there is no singular Indian federal law that prohibits online gambling. Although some Indian states may have state-level laws on the matter, others do not. In the face of such uncertainty, the Centre could not afford to let the industry unregulated on the federal scale any longer.
Potential effectiveness of the tax
Although the Centre only started implementing the tax on October 1, 2023, some after-effects of the tax’s existence became evident even before October. In August 2023, Quizy India gambling operator announced its shutting down due to the policy. At the same time, other platforms such as Fantok and One World Nation suspended their operations in fear of the new policy.
The Center may have imposed the tax to address the challenge of improving capital expenditures. This decision also coincides with efforts to restrain the government budget deficit, especially as the Indian public debt has exceeded 90% of the gross domestic product (GDP).
Despite the restrictive tax policy, it is unknown how effective the tax is going to be. About 40% of Indians admitted to committing online gambling at least once. The number itself is higher if other gambling activities are involved, due to the availability of gambling options in India.
High interest and demand for gambling in India remain high due to cultural reasons since it has become easier to gamble in recent years due to technological advancements. Prospects of winning big are also irresistible for many, prompting everyone to gamble at least once to experience the thrill of winning an untold amount of financial wins.
Furthermore, the gambling industry would also resort to going underground or considering other ways to stay afloat. The illegal gambling scene has been a concern for the Centre for some time, as exemplified by the arrest of 45 people for underground gambling in Mumbai in October 2023.
While there is no sign the Mumbai arrest was a direct aftermath of the tax policy, the tax itself still has the potential to push more Indians into illegal gambling. As a result, India’s gambling industry will presumably continue flourishing in 2024, even after the tax came into effect.
Going forward
It is still too soon to see if India’s gambling industry will languish due to the tax’s implementation. Domestic and international gambling platforms are still available for Indian gamblers, including live game shows known on TV that Indian gamblers can take part in. In the end, the Centre will probably have to relax the tax to turn the gambling industry into a legal source of income for the national economy in a better policy framework.