FDI inflows would provided relief to the industry after a controversial tax hike. Credits: gorodenkoff/GettyImages

India’s government is considering allowing 100% foreign direct investment (FDI) in its online gaming sector after a tax hike caused mass disruption in the industry.  

The business news site Mint reported that officials were reviewing a proposal from the Department for Promotion of Industry and Internal Trade.  

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

The tax hike 

In 2023, the Goods and Services Tax (GST) council approved a 28% tax on real-online money gaming which came into effect in October.  

Before the amendment, start-ups paid a small tax on the fee they charged users for offering the games.

The new tax applied to the full-face value of a gaming transaction. It was estimated that under this regulation, over half of player winnings would be taxed.  

For every $100 spent by a player, $28 would go to GST, $5-10 would be charged by the gaming platform, and there would be a 30% tax deducted on player winnings.  

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Gaurav Gaggar, a promoter for a poker site, said the tax “killed the multibillion-dollar industry with a single stroke. And at the same time the decision could give a massive boost to illegal and illegitimate operators in the country.” 

A booming industry disrupted 

The decision through the industry for a whirlwind.  

It led to a dry up of funding, slashed through profit margins, stalled growth, caused job losses and an uncertain future for the industry, as per a survey conducted by EY and the US-India Strategic Partnership Forum.  

Before the tax changed, the GST cost accounted for 15.24% of the revenue. Since its implementation, the GST consumes 50-100% of the revenue of 33% of companies. 

The industry has not raised any new capital since October 1st, 2023, when the tax was implemented.  

A glimmer of hope 

While the government has not made any public statements yet, the possibility of allowing 100% FDI into the online gaming sector could provided much needed respite.