India’s Goods and Services Tax (GST) Council has issued a notice demanding land-based best online casinos and online betting platforms in the country to pay the goods and services tax for the financial year 2018. The delayed request by the GST Council aims to collect approximately US$12 billion in tax revenues. Gaming operators, however, are disputing these tax amounts and have appealed to state courts seeking alternative tax payment arrangements.
Expected Tax Revenue of $12 Billion
Inside Asian Gaming (IAG) reports that the anticipated tax revenue, as disclosed by a state official, is determined using a tax collection model based on the gambling operators’ handle rather than gross generated revenues. The official considered the recently implemented 28% tax by India’s Goods and Services Tax Council on the total value of casino deposits and bets placed in land-based casinos, online gaming, and horse racing betting facilities. This calculation results in an estimated US$12 billion to be collected by the tax authority.
Divergence from Global Casino Industry Practice
Contrary to the global casino industry practice, where gaming taxes are typically applied to gross revenues, the GST Council in India has opted to tax the total amount gambled by players. This has prompted numerous casino and online operators to contest the decision in competent courts.
Appeals by Operators
A major operator, Delta Corp, has appealed against a GST Council request to pay approximately US$2.8 billion, a figure reportedly six times higher than the company’s handle. The court granted a stay for a hearing to be scheduled. A similar stay was granted for online operator Gameskraft Technologies Pvt Ltd by the Supreme Court after the government’s appeal. In May 2023, Gameskraft Technologies reportedly successfully contested the 28% tax rate in the Karnataka high court.
Ongoing Legal Proceedings
The government, dissatisfied with the Karnataka high court’s decision, appealed to the Supreme Court, leading to a stay until further action. A government official commented, stating, ‘In the case of online gaming, one case has been decided by the Karnataka high court. That matter is before the Supreme Court. They will be deciding on the core issue. The recovery [of the tax demand] will depend on the outcome of court cases.’
Constitutional Concerns
Delta Corp contends that the payment requests are unconstitutional. The company argues that the demand for GST on the gross bet value, rather than gross gaming revenue, is arbitrary and contrary to the law. Delta Corp intends to pursue all available legal remedies to challenge the tax demand and related proceedings.
