Indian DFS scene faces GST tax conundrum

Indian business news sources have reported that the nation’s tax authorities are revising how to charge a ‘goods and services tax (GST)’ on the burgeoning Indian daily fantasy sports (DFS) industry.

State level tax authorities are said to be reviewing whether to charge DFS operators on GST applicable to net commission earned from DFS games and prize pools, or whether to simply charge a wholesale tax on transactions.

The Economic Times reports that executives from ‘half a dozen gaming companies’ have been questioned by the Indian tax officials. However, it is maintained that to date the Indian Ministry of Finance has made no formal demand on DFS taxes.

Reacting to developments, the Indian Federation of Sports Gaming (IFSG) – an industry trade body representing 26 gaming stakeholders – has asked the Ministry of Finance for clarifications on GST charges.

Focusing on IPL cricket matches, daily fantasy sports has been gaining popularity across India, a nation where sports betting is illegal.

This April, leading Indian DFS operator Dream11 confirmed its place amongst ‘Asian tech unicorns’ securing a $100 million funding round led by Hong Kong fund Steadview Capital and Chinese Tech conglomerate Tencent.

Marketing leader Dream11 has detailed to media that at present it ‘pays 18% GST on gross commissions, which the company states is compliant with the current tax regulations.

Stating its case, the Mumbai-based operator has appealed to Punjab Courts to have DFS classified as a ‘skill-based activity’ differentiated away from gambling verticals such as the lottery, which at present maintains a 28% GST charge.