India’s Government Requests US$12 Billion In Taxes From Gambling Operators For FY 2018

India’s governmental body Goods and Services Tax (GST) Council has sent out a notice to the country’s land-based casinos and online gaming platforms to make payments of the goods and services tax for the financial year 2018. As reported, the GST Council’s delayed request for payment expects to collect around US$12 billion in tax revenues as the gaming operators are referring to state courts requesting tax payments different to those proposed by the Council.

$12 Billion Tax Revenue Expected:

As Inside Asian Gaming (IAG) reports, the expected tax revenue figure revealed by a state official is based on a tax collection model referring to the gambling operators’ handle rather than gross generated revenues. The official took into account the lndia’s Goods and Services Tax Council‘s recently implemented 28% tax on the total value of casino deposits and bets placed for land-based casinos, online gaming and horse racing betting facilities to come up with a US$ 12 billion figure anticipated for collection by the authority.

Global casino industry practice includes the application of the gaming tax on gross revenues generated by gambling service providers which additionally have to make payments of taxes, interest, depreciation, and amortization to get to the net gaming revenue generated over a single year. Such a net gaming win is mostly several times lower than the gambling handle, i.e. the total amount gambled with an operator. The GST Council’s move to apply 28% to the total amount gambled in the country in the financial year 2018 has driven multiple casino and online operators to appeal to competent courts.

Operators Making Appeals:

A leading operator Delta Corp has made such an appeal after having received a GST Council’s request to pay a total of around US$2.8 billion, the value reportedly six times higher than the company’s handle. According to IAG, the court awarded a stay for a hearing to be summoned. The same action was ordered for online operator Gameskraft Technologies Pvt Ltd by the Supreme Court after the government’s appeal. In May 2023, this operator reportedly disputed the 28% tax level and won the case before the Karnataka high court.

As reported, the government appealed and the Supreme Court ordered a stay until further action.  The government official reportedly commented on this case: “In the case of online gaming, one case has been decided by the Karnataka high court. That matter is before the Supreme Court. They will be deciding on the core issue. The recovery [of the tax demand] will depend on the outcome of court cases.”

Constitution Referrals:

IAG reports that the leading gambling operator Delta Corp believes that the requests for payments were unconstitutional. The company reportedly said: “Demand of GST on gross bet value, rather than gross gaming revenue, has been an industry issue and various representations have already been made to the Government at an industry level in relation to this issue. The Company has been legally advised that the DG Notice and the tax demand is arbitrary and contrary to law, and the Company will pursue all legal remedies available to it to challenge such tax demand and related proceedings.”