India’s Gambling Industry Sounds Alarm as Tax Rates Hit 40%

Shares in liquor, cigarette and gaming companies fell on Monday, August 18, after the government announced plans to increase the “sin” and “luxury” tax rate to 40% from 28%. The “sin” or “luxury” tax includes all online gambling, tobacco, alcoholic and carbonated drinks, and luxury goods.

The news was announced by Prime Minister Narendra Modi on August 15, during the 79th Independence Day. In his statement, he also announced the following changes:

•  5% tax on essential and daily necessities
• 18% tax on most other goods and services instead of 28%.

The country’s gaming sector is sounding the alarm, with many operators struggling to continue operations after the tax hike to 28% in 2023. The 12% tax increase will create problems for all operators, from small to large, and may cause many companies to move to countries with more favorable jurisdictions for conducting gambling business. There is also a possibility of the growth of popularity of illegal gambling platforms. Although the Indian government is actively fighting the gray market and all those involved in its promotion, such platforms always find workarounds to continue their activities. Such a change in the tax structure will undoubtedly have a positive impact on ordinary consumers, whose spending on household appliances, electronics, cars, etc. will significantly decrease. However, sectors that are classified as “sin” or “luxury” are experiencing upheaval and are preparing for radical changes.