Indian Gambling Profits Embroiled in High Tax Battles

The Indian government has some of the harshest tax rules on gambling. A recent ruling has stated this will remain the case for the immediate future. In this article, we discuss why taxes have stayed high.

Last month, the Goods and Services Council (GST) of India announced that a 28% levy would remain. Coming into being in October 2023 it was due a six-month review. Despite increased revenue from the sector, many thought the government would have assisted its growth by lowering the levy.

Indian Goods and Services Battle on Gambling

The Indian Minister of Finance is Nirmala Sitharaman. She noted that the sector's revenue had increased. This was despite the introduction of the rate. This saw it grow 412% between November and April. This was the six-month period after the tax was introduced. It had also increased revenue in physical cases by 30%. This totalled £628m for the online sector and £19.5m for physical casinos.

She was also asked if leaving them as they were meant the industry had accepted the levy. She responded by saying the council had heard the facts and that was where it was left. Betting on animal racing, digital casinos, and online gambling all fall under the banner. It will remain as such for the foreseeable future.

The Goods and Services Council includes electives from states across the country. They decide on procedures, rates, and exemptions. This shows that there is a wide range of bodies that are supportive of the high rate. It may take some convincing to change their minds.

The Growth of Online Wagering and Gaming in India

Despite this, the Indian casino industry has managed to grow over the last few years. It is a product the public wants, as shown in the revenue the sector is making in the country. Yet if you are an Indian citizen, this law makes online gambling a pursuit reserved for the very wealthy.

There have been many ways it has managed to attract and retain new customers. One of these has been the provision of Indian no deposit casino bonuses. These allow the Indian public to sign up to online casinos and try games without having to make a financial commitment. The deposit is made, and this can be used to try slot games or table games. It has also worked to enhance its provision, including well-known digital versions of Indian games like Andar Bahar.

Another factor that has made it more popular is the improvements made in connectivity throughout India. Many people are choosing to use a mobile device as their primary form of entertainment. This has led to an interest in casual gaming, as opposed to titles that require a large financial investment such as a console, to play.

Reactions to the GST Levy

The review had been scheduled for the June session this year. However, it was postponed and this sent shareholders into a frenzy. Many immediately speculated a high gambling tax rate would remain. Economists have warned that this high rate is unlikely to impact company profits, but will instead be passed onto the players.

There is also worry that it could have a damaging effect on the Indian gambling industry long term. Since 2019 there has been around $2.6bn of foreign investment in the sector. This has been reduced to zero since the introduction of the tax rates. Speculators are now concerned global companies will turn their attention to emerging markets where tax is likely to be much lower, such as South America and the US States that are changing their legislation.

Many have also raised issues about the consequences of the tax hike, which was previously at a lower 18%. This has included layoffs in the sector leading to higher levels of unemployment. Proposals were made to specifically add this to gross gambling revenue instead of player deposits, though this was not deemed acceptable.

Where Will the Casino Industry in India Head?

The casino industry in India is in a precarious position because of this levy. Firstly, there are a host of benefits that have been seen in other countries because of the online gambling industry. This is generally tax revenue, but none have been this high. In keeping a levy of this magnitude, the government could be killing off a viable revenue-making industry.

There are plenty of other emerging markets the global casino industry can put its money toward instead. This could make it a now-or-never moment for the government to decide on its tax laws. However, with this being finalized it seems that it will be at least another six months before this is even considered. This leaves companies in the country with a decision: To go elsewhere or take the hit and try to survive in a tax-hungry environment while benefitting from reduced competition.