To support the sector's expansion, India's real-money gaming companies have urged logical tax laws, as well as the resolution of taxation issues in the Union Budget of 2025. Finance Minister Nirmala Sitharaman will release the budget for fiscal year 2025-26 on February 1.

"In the Union Budget 2025-26, we urge the government to prioritize rational tax policies that could boost the sector's contribution to the economy while ensuring player protection and responsible gaming practices," said Anuraag Saxena, CEO of the E-Gaming Federation (EGF), a skill-gaming industry body.

"With the potential to contribute Rs 75,000 crore in GST over the next five years, the online gaming industry is a crucial catalyst for economic advancement," he added.

GST Reforms

Furthermore, Saxena stated that while recent goods and services tax (GST) reforms have offered muchneeded clarity to the business, retrospective tax demands have "introduced uncertainty and adversely impacted investor confidence," posing hurdles to the sector's growth. EGF, which represents India's largest online rummy and poker providers, including Games24x7, Head Digital Works, and Junglee Games, claimed it had made a presentation to the finance minister during pre-budget talks.

Mitigating Looming Challenges to face a precarious future due to uncertainty surrounding taxation," Saxena stated in the December statement.

He also emphasized that any possible solution must not result in revenue loss to the exchequer, which could occur if legitimate businesses are closed down due to retrospective tax notices issued by the revenue department to companies engaged in realmoney gaming.                                     

This, however, was insufficient, as the finance ministry warned in Parliament in December 2023 that up to 71 show-cause notices were issued to realmoney gaming companies for alleged GST evasion totaling Rs 1.12 lakh crore, excluding interest and penalties, for the period prior to October 1, 2023. 

On January 10, the Supreme Court ordered a stay on these notices until the proceedings were resolved. The subject is now scheduled for a final hearing on March 18. Roland Landers, the chief executive of the All India Gaming Federation (AIGF), had similar thoughts.

"We hope that the government will think of bringing the GST rate down and retrospection, which would provide much-needed clarity to continue further growth and innovation. With further effort, we envision a future where more Indian developers and gaming studios create world-class games and content, and help make India a global leader in gaming,” he added.

Deepak Gullapalli, founder of skill-based gaming startup Head Digital Works, believes the forthcoming budget would also streamline TDS standards on earnings from real-money games, bringing them in line with other sectors. "That would be excellent for consumers. It will help them to use the money more effectively due to greater liquidity, while also ensuring that they do not deviate from somewhat reduced TDS rates," he stated.

WinZO Games co-founder Paavan Nanda also suggested that legislation and taxation reflect Prime Minister Narendra Modi's objective of attracting a sizable percentage of global FDI (foreign direct investment) to the sector. This will encourage investment in developing and exporting high-quality games, as well as cultivating the necessary talent for the business, he said.

According to a research by Lumikai, the gaming and interactive media venture fund, the Indian gaming business recorded sales of $3.8 billion for the fiscal year 2024, up 22.6 percent from USD 3.1 billion in FY23. The real-money gambling segment generated approximately USD 2.4 billion of the USD 3.8 billion revenue.

Furthermore, as per the analysis, the industry is predicted to generate USD 9.2 billion in sales by FY29, with a CAGR of 20 percent over the next five years.