There are 507 million gamers in India of which 120 million are paying users. These users are likely to be more price-sensitive than casual gamers, and they may be less likely to continue playing if the cost of playing increases.
The GST Council imposing 28 percent tax on online gaming and casinos on full face value would not just lead to losses for the companies in the space but also leave the players to switch to offshore platforms among other things.
Here’s Five Ways the new increased tax would impact a player.
Overall increased cost of playing: The 28 percent GST will be levied on the total amount that a player puts in, meaning that the cost of playing will increase. For example, if a player wagers Rs100, they will now have to pay Rs28 in GST and a platform fee too. This will leave the player with a lesser amount to play with.
Reduced winnings: If a player gets to invest less in the game naturally the winnings will go down. There is then a 30 percent TDS too that would have to be paid out on winnings. This leaves players with very little of their winnings.
Decreased participation: The higher cost of playing and lower winnings may discourage some gamers from participating in real money games. This could lead to a decrease in the number of players and the amount of revenue generated by the industry bringing down prize pool amounts which is reflective of the user interest in a game.
Shifting to offshore platforms: Some gamers may choose to play on offshore platforms that are not subject to GST. This could lead to a loss of revenue for the Indian government and the Indian gaming industry and increased cases of money fraud/loss.
Increased regulation: To counter the growth of the offshore companies that are evidently waiting to cash on the shifting consumers burdened by 28 percent GST, the government may increase regulations around real money gaming. This could make it more difficult for operators to obtain licenses and operate in India.