The tax is a "step in the right direction", says Siddhartha Iyer, a Supreme Court lawyer who has been fighting to ban online gamingThe Indian government's decision to impose a 28% tax on online gaming poses an "existential threat" to the booming industry and could spell its death knell, say experts.
According to industry estimates, total tax collection on player winnings will go beyond 50%, including GST, platform commissions and income taxesIn effect, for every $100 spent by a player, there will be a "sunk cost" of $28 towards GST, in addition to a $5-15 charge by the gaming platform and a 30% tax deducted at source on any winnings drawn.
"Many gaming companies, in order to limit the impact on the investors side, may choose to relocate their business outside India," Mr Thacker added. Gambling, which is seen as a chance-based game, is illegal in many India states and is frowned upon. But most states have allowed online games which are seen as skill-based.
"It is very unfortunate that when the government has been supporting the industry… such a legally untenable decision has been taken," Roland Landers, CEO of the All India Gaming Federation said in a statement. "It will be catastrophic for the $1tn digital economy dream of the prime minister." He expects the gaming industry to unite and mount a strong legal challenge if the federal and state governments go ahead and enact the amendments into their tax laws.the move a "unanimous" decision that would not be reviewed or rolled back.Announcing the decision late on Tuesday, Finance Minister Nirmala Sitharaman said that the GST council, which comprises of federal and state finance ministers, said "no one wanted to kill an industry".