The real-money gaming (RMG) sector received no respite in the Interim Budget 2024-25, announced by Finance Minister Nirmala Sitharaman hours ago. The much-anticipated revision of the 28% GST on online gaming, casinos, and horse racing, implemented in October 2023, was absent from the budget speech, with Sitharaman explicitly clarifying that there would be no alterations to the current direct and indirect tax rates.
Though disappointing, the continuation of the high tax rate wasn’t entirely unexpected. Finance ministry sources had already hinted at no reduction in GST demands on January 18. Moreover, the budget decision aligns with the decision taken at the 51st GST Council meeting, which imposed the controversial 28% levy regardless of skill or chance elements in games, countering the industry’s proposal to levy 18% GST on gross gaming revenue (GGR) or platform fees.
When the 28% GST was implemented in October, the government assured the industry that this rate would be reconsidered six months later, around April 2024. However, due to the upcoming General Elections in April-May, the Union Budget for 2024-25 will only be declared after a new government is elected. Until then, the Interim Budget, unveiled today by Finance Minister Sitharaman, will remain effective. Therefore, any potential relief for the real-money gaming RMG industry is unlikely to materialize before mid-year.
The high GST has significantly impacted RMG companies, transitioning from an 18% GST on GGR to a 400-500% increase. Dream Sports, for example, despite a 66% revenue increase to ₹6,384.49 Crores in FY2023, faces a hefty ₹28,000 Crores show cause notice for GST evasion. This tax demand suggests a potential dramatic decline in revenue and operational profit for Dream Sports in the current financial year, a concern shared by Delta Corp, which reported a 59% drop in Q3 profits year-over-year.
Despite the setback, Roland Landers, CEO of All India Gaming Federation, remained optimistic, highlighting the budget’s focus on technology and youth, potentially benefiting the larger tech and game development sectors. He urged for “progressive budgeting” in the upcoming union budget, aligning with AVGC policies and fostering self-regulation. He shared, “Today’s interim budget announcement may not have directly addressed the needs of the gaming industry. However, the clear focus on technology and the youth is one that we deeply appreciate. We believe that the announcement proposing long-term financing for the sunrise sectors to scale up on research and innovation will be beneficial for the technology and startup sector as a whole, including the gaming and game-development sub-sectors. We are hopeful for more concrete and decisive measures addressing the online gaming industry in the upcoming Union Budget.
We urge progressive budgeting to empower responsible online gaming, aligning with AVGC policies and fostering self-regulation, as recommended by the I&B Ministry’s AVGC Task Force. This will unlock industry potential and benefit the economy, players, and creators.
As the apex industry body, we are committed to working with policymakers to create an enabling environment for the gaming sector’s growth and innovation. Our industry has immense potential, and we look forward to constructive policies that will drive its development in the union budget.”
Though the budget neglected the RMG industry’s immediate needs, it announced several key initiatives, focusing on broader sectors like infrastructure, healthcare, housing, and financial sectors, among others.
Key Highlights of the Interim Budget 2024-25
- Infrastructure Boost: The government has set an ambitious capex target of ₹11.10 Lakh Crores, representing an 11.1% increase and 3.4% of GDP. This includes expanding rail and aviation networks, converting 40,000 railway bogies to Vande Bharat standards, and promoting e-mobility solutions.
- Tax Relief Measures: Individual taxpayers with demands up to ₹25,000 will see their cases withdrawn, benefiting 1 Crore taxpayers. Tax benefits for startups and funds are extended to March 2025.
- Fiscal Consolidation: The revised fiscal deficit for FY24 is 5.8% of GDP, aiming to reach 5.1% in FY25 and 4.5% in FY26. Gross market borrowing is pegged at ₹14.13 Lakh Crores, with net borrowing at ₹11.75 Lakh Crores.
- Green Initiatives: The government aims to achieve a coal gasification and liquefaction capacity of 100 million tonnes by 2030, promote the blending of CNG and biogas, and support EV manufacturing and charging infrastructure.
- Innovation and Defence: A ₹1 Lakh Crore fund will support deep tech, particularly in defence, encouraging private sector participation in R&D.
- Other Key Sectors: Initiatives include PM Kisan Sampada Yojana benefiting 38 Lakh farmers, five integrated aqua parks, interest-free loans for innovation in sunrise sectors, and tourist development projects in islands like Lakshadweep.
While the Interim Budget offered no immediate relief for online gaming, it highlighted the government’s broader priorities. The RMG industry now faces the challenge of adapting and innovating within the current tax framework until the full Union Budget after the elections.
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