India’s online gaming industry faces an existential crisis. A dramatic GST hike from 18% on Gross Gaming Revenue to 28% on deposits, implemented after the 50th GST Council meeting in July 2023, has led to skyrocketing taxation—a more than 1000% increase. This has left businesses floundering and gamers migrating to offshore platforms promising “No-GST” gaming.
Since October 2023, when the new GST rate took effect, Indian platforms have lost ground. Estimates reveal that only 17% of Indian players’ spending remains on domestic platforms, with the rest funneled into offshore entities, primarily Chinese. Many Indian gaming firms have shut down, while others struggle to sustain operations in this punitive tax regime.
Illegal offshore platforms thrive, with some witnessing explosive growth. For instance, the banned platform 1xBET recorded a 74.31% rise in activity between October and November 2023. Research shows a 35% rise in Indian users on such platforms, costing the Indian exchequer billions. Offshore platforms collectively evade approximately $4.1 billion in GST annually.
This crisis isn’t just economic. India’s gaming culture is underrepresented, with 78% of Indian gaming hours spent on foreign-backed games. Loopholes in laws and lax enforcement enable illegal platforms to exploit digital payments and advertising regulations.
The GST Council’s promised tax review remains overdue. Without swift intervention, India’s gaming potential risks slipping away to offshore operators who neither pay taxes nor safeguard Indian gamers. A balanced policy is critical to stabilize the industry.
