India's Big Bet: A Hefty 28% Tax on Mobile Gaming

The Indian government has recently decided to exact a sizable 28% tax on all online gaming activities. Announced during the 50th meeting in New Delhi, this decision equates online gaming with gambling activities such as casinos and horse racing. This dramatic move indicates a significant shift in the perspective and regulation of the online gaming industry.

Predominantly, the mobile gaming sector is poised to feel the brunt of this controversial decision. India’s mobile gaming landscape has been flourishing, with hypercasual games and social casino games stealing the show. Specifically, there was a 32% rise in hypercasual game installations in India in 2022. This surge signifies the industry’s potential for generating revenue, which the government aims to tap into using this new tax strategy.

Interestingly, this isn't the first time India has taken stringent measures against the gaming industry. Just recently, Rajeev Chandrasekhar, the Minister of State for Electronics and Information Technology, hinted at potentially banning three types of mobile games. Yet, the newly imposed tax has received some mixed responses from the industry.

The Goods and Services Tax (GST) Council has simplified the tax application process by refusing to differentiate between “a game of skill and a game of chance.” However, this approach has raised a few eyebrows. Industry leaders have expressed their concern, specifically about the potential impact on the esports sector, which they argue is skill-based and distinct from casual gaming.

With these recent changes, the future of the mobile gaming industry in India has become uncertain. There are doubts regarding whether the industry will reach its projected valuation of $8.6 billion by 2027. It is a wait-and-watch situation as the industry navigates these new waters and adapts to the potential challenges the new tax imposition may bring.