India Plans to Impose 28% Tax on Online Mobile Games

In a recent decision by the Goods and Services Tax (GST) Council, India has announced its intention to apply a significant tax on online gaming firms. The move aligns online gaming with gambling activities such as horse racing and casinos. Under the new policy, online games will be subject to a 28% levy based on their full value.

Impact on Mobile Gaming

The implementation of this tax is expected to have the greatest impact on the mobile gaming sector. Mobile gaming is the dominant platform in India, with hypercasual games and social casino games being particularly popular and profitable. In fact, hypercasual game installations in India increased by 32% in 2022.

This is not the first time India has taken action against gaming. Just last month, the country’s Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar, hinted at a possible ban on three types of mobile games.

No Distinction Between Skill and Chance

The GST Council has decided not to differentiate between “games of skill and games of chance,” taking a simplified approach that fails to address nuances such as the issue of loot boxes. Industry leaders, such as Qlan co-founder and CEO Sagar Nair, expressed concern over the 28% tax rate and its impact on the competitive gaming community. Nair argues that while measures like this may be justified for casinos and gambling, they are not appropriate for the esports community.

Rohit Agarwal, founder and director of Alpha Zegus, echoed this sentiment, highlighting the skill element present in esports and advocating for a distinction between esports and other forms of gaming.

Uncertain Future for Indian Mobile Gaming Market

The Indian mobile gaming market was previously projected to reach a valuation of $8.6 billion by the end of 2027. However, with the introduction of the new tax, it remains uncertain whether the market can maintain its momentum.