Potential for increased government revenue through uniform GST rate for online gaming industry, says Revenue Secretary

Revenue Secretary Sanjay Malhotra has suggested that implementing a uniform Goods and Services Tax (GST) rate of 28% for the online gaming industry could significantly increase government revenue.

Currently, the industry pays only 2% of its estimated turnover as tax. Malhotra estimates that by applying the uniform GST rate, the government could earn ten times more than the Rs 1,700 crore collected in the previous financial year.

He emphasized the principle of equity in taxation and stated that measures such as tax collected at source (TCS) or regulation of entities could be considered to ensure tax compliance. Additionally, online gaming companies operating from outside India may face tax obligations or potential penal actions for non-compliance.

“Rs 1700 crore is the revenue that we got last year from online gaming in 2022-23, around Rs 300 crore from casinos in the two states and about Rs 80 crore from horse racing last year…the online gaming (industry) is paying only about 2 per cent, so you multiply it by 50. That becomes around Rs 85,000 crore (industry size)…(at 28 per cent GST) about ten times what we are getting,” Malhotra told reports.