Small gaming companies to shut shop after sin tax as gamers move offshore
The online gaming Bill introduced in the Lok Sabha “prohibits” offering, aiding, abetting, inducing online money games and online money gaming services.
The online gaming industry expects small business houses to shut down their operations as gamers move to greener pastures in countries such as the UK and Sweden without any legal recourse in case of any dispute.
Industry estimates GST loss of over $4 billion with gamers moving offshore. This is much higher than the $3.5 billion in revenue generated by India’s real-money game industry. The sector itself contributes over ₹25,000 crore in annual taxes.
The online gaming industry faces uncertainty over a 40 per cent sin tax even as the Supreme Court is looking into all the issues pertaining to this industry including whether online gaming is a state or central subject and whether online skill-based games played for stakes amount to gambling and betting.
Prominent players in this space include Dream11, Games24x7, Nazara Technologies (Pokerbaazi), Gameskraft and Mobile Premier League.
The online gaming Bill introduced in the Lok Sabha “prohibits” offering, aiding, abetting, inducing online money games and online money gaming services.
Satish Chandra Jha, senior advocate and former Senior Standing Counsel of Central Administrative Tribunal, said if the government were to implement the new sin tax, it can almost certainly bid farewell to this handsome revenue stream.
The increased 40 per cent sin tax will ensure that medium and small businesses fold operations almost immediately and large businesses will be forced to either re-strategise or move to greener pastures in countries like the UK, Sweden, he said.
Another grave consequence of this arbitrary GST increase in gaming will be an additional boost to the already flourishing illegitimate gaming sector that allows customers to play without any verifications, practically off the radar, he said.
When one hears of suicides in the hinterlands because of gaming addictions, it is more often than not illegitimate operators that have players hooked for easy returns, much like ponzi schemes and extortionist non-institutional loans, said Jha.
Published on August 20, 2025
