Online Gaming Industry Complies With New GST Law But Retro Tax Still A Threat

Navigating the Crisis: Indian Fantasy Sports Under Threat

Source: FIFS

The Indian fantasy sports industry, once a burgeoning sector, now finds itself in choppy waters. A series of regulatory measures, including a drastic increase in the Goods and Services Tax (GST) and retrospective tax demands, have sent shockwaves through the ecosystem.

The Government of India's decision to levy a 28% GST on total deposits, as opposed to the previous 18% on gross gaming revenue, has dealt a severe blow to RMG companies. This substantial hike in tax rates has forced these companies to rethink their operational strategies, leading to workforce reductions and cuts in research and development (R&D) efforts.

The companies did everything they could to comply with the new GST rules.

However, the Directorate General of Goods and Services Tax Intelligence (DGGI) has thrown another curveball by demanding close to 40,000 crore in retrospective taxation from the industry. This astronomical demand, coupled with the already burdensome tax regime, has created an existential crisis for many players in the industry.

Also, there is a palpable fear that the impending financial burden will force many legitimate online gaming platforms to shutter their operations. This could pave the way for unregulated and potentially illegal operators to exploit the Indian users, posing significant risks to players' interests and consumer protection.

In light of these developments, it is imperative for stakeholders to closely monitor the situation and advocate for sustainable solutions that ensure the continued growth and integrity of the Indian gaming landscape.