India’s online gaming industry has been given another chance to challenge the decision by PM Modi’s cabinet to increase the Goods and Service Tax (GST) levy for the sector from 18% to 28%.
The country’s Supreme Court has now asked for further comments by the Indian government in response to a plea filed by a number of online gaming entities challenging the tax slab hike, which has led to significant tax evasion notices being handed over to local businesses.
In July last year, India’s GST Council announced plans to bring the GST levy up to 28% for all types of online gaming that involve betting, to essentially equate skill-based games like poker with games of chance on the tax front – going against all previous lobbying efforts to set a clear distinction between both.
Since then, the move has been questioned by multiple online gaming industry bodies such as the E-Gaming Federation, citing concerns that this is hurting companies who are now having to lay off staff and forcibly restructure their business strategies.
Moreover, despite the tax increase being officially brought into force in October 2023, in some cases the issued tax evasion notices go back as far as 2017, leading to legal action being taken against the decision by companies like Indian casino provider Delta Corp.
The aftermath of the tax enforcement saw NYSE-listed Super Group, the parent company of Betway and Spin brands announce its withdrawal from the market, declaring that “India was no longer commercially viable”.
Meanwhile, FTSE100 Flutter Entertainment cited forthcoming adjustments for its Indian online rummy room Junglee due to GST charges.
The Supreme Court agreed to a final hearing of cases challenging GST’s decision, which will take place on 2 April 2024.