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India Takes Decisive Action Against Illegal Online Gambling and Betting Apps
In a significant move to curb illegal online gambling activities, the Government of India has…
Tanisha Khanna from Nishith Desai Associates and former Indian government secretary Dr. Aruna Sharma discuss the effects of Kerala’s new 28% goods and services tax (GST) with iGB.
Kerala’s governor, Arif Mohammed Khan, authorized a GST increase on gambling from 18% to 28% on January 5. This change aligns with the 2023 amendments to the Central Goods and Services Tax Act 2017. The revised GST impacts online gambling fees, including casinos and horse racing, though Nishith Desai Associates argue it should apply solely to platform fees.
India’s finance minister announced a review of this rate after six months. Khanna notes the tax is being adopted or considered by various Indian states. She believes the increased rate might deter smaller operators but won’t significantly impact India’s robust gambling market.
A contentious issue arises from attempts to enforce the 28% GST retroactively, dating back to 2017, sparking legal challenges and potential market disruption. Show cause notices alleging GST evasion have been issued to 71 operators, amounting to ₹1.12tn.
The retrospective application and tax on the total bet value are major concerns. Khanna and Sharma highlight the legal challenges escalating to the Supreme Court, potentially shaping the business landscape.
Regarding skill-based gaming, Sharma mentions Kerala’s non-recognition of rummy and horse racing as skill games. Khanna adds that skill games are constitutionally protected in most Indian states, but a unified skill game classification system is lacking. Efforts to introduce a co-regulatory mechanism for game classification have stalled.
Looking ahead, 2024 is pivotal for India’s gaming sector. Khanna is keen on the IT ministry’s role in regulating new IT rules and the Supreme Court’s decisions on skill game bans. Sharma views India as a potential hub for igaming development, emphasizing government efforts to regulate the industry for player protection and compliance with anti-money laundering policies.
The industry remains watchful as these developments unfold, potentially leading to significant legislative changes in India.