In order to maintain the expansion of the industry, real-money gaming companies in India have called for reasonable tax laws and the resolution of tax-related concerns in the Union Budget 2025. On February 1, Finance Minister Nirmala Sitharaman will unveil the fiscal year 2025–2026 budget.
Anuraag Saxena, CEO of the E-Gaming Federation (EGF), a trade association for skill gamers, stated, "We urge the government to prioritize rational tax policies in the Union Budget 2025-26 that could enhance the sector's contribution to the economy while ensuring player protection and responsible gaming practices. 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 stated.
Although the industry has benefited greatly from the recent goods and services tax (GST) reforms, according to Saxena, the retroactive tax demands have "introduced uncertainty and adversely impacted investor confidence," which has hindered the sector's ability to grow.
During pre-budget meetings, EGF, which represents the leading online rummy and poker providers in India, including Games24x7, Head Digital Works, and Junglee Games, claimed it also made a presentation to the finance ministry. In the December submission, Saxena stated that "the sector continues to face a precarious future due to uncertainties surrounding taxation."
He also underlined that developing any potential solution must not result in a loss of revenue for the exchequer, which could happen if lawful companies are forced to close their doors due to the revenue department's retroactive tax notices to real-money gaming companies.
This was insufficient, though, as the finance ministry informed lawmakers in December 2023 that up to 71 show-cause notices totaling Rs 1.12 lakh crore (excluding interest and penalties) had been sent to real-money gaming companies for alleged GST evasion during the period prior to October 1, 2023.
The Supreme Court issued a stay of these notices until the proceedings were resolved on January 10. The final hearing on the case is now scheduled for March 18. Similar opinions were also expressed by Roland Landers, CEO of the All India Gaming Federation (AIGF), an organization that represents the skill-gaming sector.
"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 stated.
The forthcoming budget may also streamline TDS standards on gains from these real-money games by bringing them up to par with other sectors, according to Deepak Gullapalli, Founder of the skill-based gaming company Head Digital Works. Increased liquidity would enable them to make better use of the funds while also making sure that one does not stray from somewhat reduced TDS rates," he said.
In Budget 2023, the government proposed changes to TDS, including the elimination of the Rs 10,000 winnings limitation and the introduction of a new method for calculating TDS on net winnings. The entire amount withdrawn during the fiscal year is subtracted from the total amount deposited during the same period to determine net wins. It also takes into account the deposit balance as of April 1st of the fiscal year and the amount that has already been subject to TDS for the current fiscal year.
Paavan Nanda, co-founder of WinZO Games, also asked that taxes and regulations be changed to better reflect Prime Minister Narendra Modi's goal of drawing a sizable portion of the world's FDI (foreign direct investment) to the industry. According to him, this would assist attract investments in creating and exporting top-notch games and cultivate the best talent for the industry.
The Indian gaming industry reported $3.8 billion in revenue for the fiscal year 2024, increasing 22.6 percent from $3.1 billion in FY23, according to a report by the gaming and interactive media venture fund Lumikai. Of the $3.8 billion in revenue, over $2.4 billion came from the real-money gaming industry. According to the report, the industry is projected to increase at a 20 percent compound annual growth rate over the following five years, reaching $9.2 billion in sales by FY29.
