India Taxes Online Gaming 28 Percent Calling it a “Social Evil”

A group of ministers in India consider online gaming sites to be a “social evil,” and the government feels that if revenues decline owing to a new 28% tax, a social as well as an economic goal will be served, the revenue secretary said on Thursday (July 13).

When the government of India announced the tax on Tuesday, it stunned the US$1.5 billion online gaming business, which has grown in popularity and drawn foreign investment. Executives have predicted job losses and lower earnings.

“The government believes that if revenues (of online gaming companies) fall due to the new 28% tax, people will engage in more productive activities,” Federal Revenue Secretary Sanjay Malhotra told Reuters in an interview.

“If demand is highly elastic and revenues fall significantly, then at least a social purpose is served,” said Malhotra, the top civil officer in India’s Department of Revenue, which is part of the Ministry of Finance.

After over two years of deliberation, the decision to levy the tax was made. Earlier this year, a government panel expressed concerns and advocated “de-addiction measures” such as periodic warnings and advises during games.

Requests for a review of the tax have been denied, with officials stating that additional dialogue with the industry is not required.

“The moral aspect is undeniably present when we tax online gaming at 28%.” “A lot of ministers at the Goods and Services Tax Council were of the opinion that online gaming betting is a social evil that should be discouraged,” Malhotra added.

Concerns about addiction have grown in tandem with the explosive growth of online gaming.

According to Redseer consultancy, revenue from fantasy gambling platforms during Indian Premier League cricket matches increased 24 percent year on year to over $342 million, with over 61 million players engaging.

Fantasy cricket teams can be created for as little as eight rupees (10 US cents).

Malhotra dismissed worries that the levy would deter foreign investment, resulting in job losses.

“Employment and investment must cater to the needs of society as well as what is good for the economy as a whole,” Malhotra added. “If an industry is not in the public interest, no government would promote it solely for the sake of employment and investment.”

Online Gaming in India

Online gaming in India has experienced significant growth in recent years. The increasing availability of affordable smartphones and internet connectivity, along with the rise of eSports and streaming platforms, has contributed to the popularity of online gaming in the country. Here are some key aspects of online gaming in India:

Mobile Gaming:

Mobile gaming is the dominant segment in India’s gaming industry. Games like PUBG Mobile, Free Fire, Call of Duty Mobile, and Clash Royale have gained massive popularity among Indian gamers. The accessibility and convenience of mobile gaming have made it a preferred choice for many.

Esports:

Esports has witnessed a tremendous surge in India, with professional tournaments and leagues gaining traction. Games like PUBG Mobile, Free Fire, Valorant, and Counter-Strike: Global Offensive (CS:GO) have established a competitive esports scene in the country. Several Indian players and teams have achieved international recognition and success in various esports tournaments.

Online Gaming Platforms:

There are several online gaming platforms in India that offer a wide range of games and services. Platforms like Paytm First Games, MPL (Mobile Premier League), WinZO Games, and Dream11 provide opportunities to play popular games, participate in fantasy sports, and win cash prizes.

Streaming and Content Creation:

Streaming platforms like YouTube, Twitch, and Facebook Gaming have gained popularity among Indian gamers. Many gamers and content creators in India stream their gameplay, interact with viewers, and build communities around their channels. This has led to the growth of gaming as a viable career option, with several Indian streamers and content creators achieving significant success.

Regulatory Environment:

The online gaming industry in India has faced some regulatory challenges. In 2020, the Indian government banned several Chinese mobile apps, including PUBG Mobile, due to data security concerns. However, PUBG Mobile returned to the Indian market in 2021 with a localized version called Battlegrounds Mobile India.

Player Base and Revenue:

India has a massive and rapidly growing online gaming user base. According to reports, India has over 365 million online gamers as of 2021. The revenue generated from online gaming in India is also on the rise, with estimates suggesting it could reach $3.75 billion by 2024.

Future Outlook:

The future of online gaming in India looks promising. With the increasing penetration of smartphones, affordable internet plans, and the growing acceptance of gaming as a mainstream form of entertainment, the industry is expected to continue its upward trajectory. The emergence of new technologies like cloud gaming and virtual reality (VR) also holds great potential for the gaming ecosystem in India.

It’s important to note that the online gaming landscape is dynamic and can evolve rapidly. Therefore, it’s advisable to stay updated with the latest trends, regulations, and developments in the Indian gaming industry.