The Indian government has sent shockwaves through the online gaming industry after announcing a staggering demand for $12 billion in tax from operators.
This move comes as a result of recent amendments to the Integrated Goods and Services Act, which now requires all online gaming operators targeting India to pay a hefty 28% tax rate.
The $12 billion demand is not just a number pulled out of thin air. It represents the taxes that online operators have failed to pay for years in a grey market environment.
Government officials are not mincing their words either. They imply that operators must pay up or face the risk of being blacklisted come an age where online gambling is fully legalised throughout the subcontinent.
Firms Already Pulling Out
The impact of this new tax plan is expected to be significant. The extra charges are almost certain to be passed on to customers, making online gaming a less attractive pastime.
This is likely to see less players signing up to sites, leading to a massive decrease in revenue for online gaming companies.
Some firms which have been enjoying a surge in popularity, now face a significant financial hurdle. The new tax plan could potentially slow down their growth and hamper the industry as a whole.
The response from online operators to the new tax plan has obviously been one of concern. It's a wake-up call for everyone involved and one that cannot be ignored.
But there is one major issue that might put paid to the expectations of the government advisors that came up with this whole plan: last year, India’s online gaming industry was valued at US$1.62 billion.
Where on earth is the money going to come from to pay the requested $12 billion? We haven’t heard the last of this, we are sure.
India's new gaming tax plan will set off a seismic shift in the local online gaming industry. It is a massive wake-up call for online operators relying on the Indian market, who must now completely reassess their business plans and brace for a potentially huge financial impact.
The potential consequences of this new tax plan on the online gaming industry and the Indian economy is yet to be seen. But we shouldn’t see this shift as a pure negative until we have seen more.
Could this be the start of fully legalised gambling in India? Poker Boom 2.0 might well be on the way being led by stars such as Santhosh Survana.