India’s embattled gambling industry is facing the prospect of a significant tax hike as part of wider Government reform.
The GST tax has been set at 28% since October 2023, however, reports have emerged that India’s Government will introduce a new 40% tax on ‘sin and luxury goods’, which includes gambling.
Other reforms include a 5% tax on essential and daily-use goods, and an 18% Merit Rate for most other goods and services.
The news will deal a significant blow to operators that remain within India’s regulated gaming market.
Following the implementation of the 28% GST tax, many operators left the country, explaining that remaining in the market was no longer commercially viable.
As a result, the country’s black market has also continued to thrive, processing $100bn in payment transactions annually.
The introduction of such a punitive tax rate comes at a time when some sections of India’s lawmakers are seeking to move away from total prohibition, and instead introduce a regulated market.
Each of India’s individual states controls gambling laws in their respective regions.
While many have chosen to establish a total prohibition on the sector, some, such as Karnataka, are attempting to establish a regulatory framework centred on skill-based gaming.
Although it is not explicitly clear as of yet if skill-based gaming will fall under the guise of gambling in relation to the new tax rate, it will add a layer of concern to operators considering entering Karnataka’s proposed market.
iGaming Expert recently explored the regulatory prospects of gambling in India in light of Karnataka’s renewed efforts, and 4H Agency’s Market Expert, Divya Negi, suggested that the state may act as a catalyst for action within other regions of India.
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