India will begin reviewing the tax regime that governs sales taxes for gaming companies that operate online from next month, according to an official from India’s finance ministry’s top rank. Last year saw disruption in Indian markets when state finance ministers led by Union Finance Minister Nirmala Sitharaman initiated action.
India’s gaming industry was given an unexpected blow in 2000 when a group of finance ministers led by Nirmala Sitharaman decided to increase taxes by 28 percent for sectors experiencing rapid expansion during pandemic. After much consideration and discussion by Goods and Services Tax Council, it was agreed to review these increases within six months.
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Implications of Tax on Gaming in India:
Revenue Secretary Sanjay Malhotra revealed during an interview on Saturday that gaming companies will need their tax structures analyzed by the government after March. Since October 1 when online gaming businesses were subjected to new taxes from October 1-January 1 (he stated 34.7 billion dollars ($418 million was paid as taxes only up until January). He estimated the government may collect 140 billion rupees by 2024-25.
Delta Corp. and Tiger Global, which back Dream11, have seen notices and tax demands rise due to authorities’ crackdown on tax evasion. According to information revealed during sessions of Parliament last December in reports by the Finance Ministry, tax officials issued up to 71 notices totalling 1.12 trillion rupees during 2023-2024 fiscal year to gaming firms that violated GST rules totalling more than 1.12 trillion rupees during that year.
Sanjay Malhotra announced that 53 online gaming companies had their accounts suspended due to failing to abide by tax regulations. With respect to capital gains tax laws pertaining to sales of securities listed or not listed for trading, Malhotra indicated that modifications or reductions of tax structures may be considered when they present the budget in July.
