Tax on online gaming may be reviewed after March, says Revenue Secy

India will evaluate the national sales tax policy for online gambling companies after next month, according to a senior finance ministry official.

India will review the national sales tax regime for online gaming companies after next month, a top finance ministry official said.

The $20 billion online gaming industry got a jolt last year when a panel of state finance ministers headed by federal Finance Minister Nirmala Sitharaman imposed a 28% goods and services tax on a sector which had boomed during the pandemic. The Goods and Services Tax Council agreed to review the tax after a six-month period.

“The whole tax structure would be reviewed for online gaming companies after March,” Revenue Secretary Sanjay Malhotra said in an interview on Saturday. Tax income from online gaming companies amounted to 34.7 billion rupees ($418 million) since it was implemented on Oct. 1 through January, he said, and the government estimates to collect about 140 billion rupees in 2024-25.

Read more: India’s 28% Online Gaming Tax Is a Major Challenge: Tax Insight

Online gaming companies including Delta Corp. and Tiger Global-backed Dream11 have seen an increase in demands and notices from tax authorities amid a crackdown on alleged tax evasion. Tax authorities have issued as many as 71 notices to online gaming companies for alleged GST evasion totaling more than 1.12 trillion rupees during the 2023 and 2024 fiscal years, the Finance Ministry told Parliament in December.

Malhotra said some 53 foreign online gaming companies have had their access blocked for not complying with tax rules.

Further, on the long-pending issue of a capital gains tax regime on the sale of listed and unlisted securities, the revenue secretary said the government will consider all demands, including simplifications of the tax structure “when we present the budget in July”.