How the GST is affecting players
Due to the GST imposed on online gaming and casinos, players have to pay tax on full value of their initial purchase of the in-game currency. To simplify, players need to pay Rs 28 of the first Rs 100 spent in the game (which is 28%).
The entire tax is being collected at entry level only. The government doesn’t impose a tax on winnings used further in the game. However, the tax that will be charged won’t be returned in case the players receive a cash refund.
How the GST will help the government
Malhotra confirmed that this strategy is paying off. He noted that the amount generated from the tax imposed on the online gaming industry has already exceeded initial projections and has crossed Rs 3,500 crore in the October-December quarter.
He expects this momentum to continue and the government is expected to collect nearly Rs 75 billion in taxes by the end of this fiscal year (ending March 31, 2024). This will also be a significant jump from the previous year’s Rs 16 billion collection.
However, Malhotra cautioned that “the industry has stabilised, but it is early to make conclusive remarks.” He also mentioned that a review of the framework to tax online gambling companies will be conducted by April. But that doesn’t mean tax rates would be changed, he added.
The government’s overall GST collections have averaged to Rs 1.7 trillion per month, Malhotra noted. “We are expecting an average monthly collection of Rs 1.80 trillion to 1.85 trillion from next fiscal year,” he added.
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