Highlights
- The Finance Minister Nirmala Sitharaman will present the Union Budget 2025 on February 1, targeting economic growth and aiming to reduce regulatory burdens on businesses.
- The online gaming industry, which has seen significant growth with 442 million users, is advocating for a reduction in Goods and Services Tax from 28% to 18% for skill-based games to foster innovation and competitiveness.
The Finance Minister Sitharaman will present the Union Budget 2025 in Parliament on February 1, 2025. The Finance Minister will be presenting her eighth consecutive budget in the Parliament.
She will aim to foster economic growth, by reducing excessive regulatory burdens, helping businesses become more efficient, reduce costs, and unlock new growth opportunities.
The Union Government has carried out a series of structural reforms in the last decade. From the Goods and Services Tax (GST), “which has been verily described as India’s EU moment,” said the Economic Survey 2024-24 released on January 31.
“The introduction of GST in July 2017 marked a significant shift in India’s indirect tax structure, aiming to create a unified, streamlined taxation system across the country.,” it added.
Online Gaming and GST
The 50th GST reccommended that all three namely Casino, Horse Racing and Online gaming to be taxed at the uniform rate of 28%. This decision was after a Group of Ministers (GoM) was constituted to look into the issues related to taxation on casinos, horse racing and online gaming.
There were two GoM reports placed before the the 47th GST Council and 50th GST Council. The GoM, in its second report has recommended that since no consensus could be reached on whether the activities of online gaming, horse racing and casinos should be taxed at 28% on the full-face value of bets placed or on the GGR, the GST Council may decide.
The reccommendations were to be, “reviewed” to align with industry prospects. The industry finds the taxation to be higher, with domestic gamers fleeing offshore, conceding domestic market to illregitmate platforms attracting consumers.
The growth of India’s online gaming industry couples with job creation and generating revenue for the state. Last year, a report published by Thornton Bharat and the E-Gaming Federation titled, “Guardians of Safe Play: Ethical Gaming for Vibrant Bharat” found that the the number of online gamers in India has reached 442 million, establishing it as the second largest gaming user base globally, surpassed only by China, the industry is also projected to experience a 20% growth by FY25, reaching Rs 253 billion.
Budget 2025: Online Gaming Expectation
The rationlaisation of GST rates is a welcome step. The expectations of online gaming industry needs to be taken into account for innovating market and competeting with global market players. The reforms must be carried forward to generate revenue as well as to foster innovation.
The tax relief to the online gaming industry will be a relief considering that the startups in the online gaming rely on new-gen tech, also competing with foreign players.
“India’s online gaming industry, generating USD 3.8 Billion in revenue, eagerly awaits Union Budget 2025 amid challenges posed by a 28% GST. Industry stakeholders seek a GST reduction to 18% for skill-based games, and thus, policy clarity to distinguish games of skill and chance, and resolution of retrospective tax issues, including waivers on penalties and interest,” said Vidushpat Singhania, Managing Partner, Krida Legal.
“Startups hope for tax breaks, funding, and R&D support, alongside an increased winnings taxation threshold from ₹10,000 to ₹50,000 annually,” he added.
With over 100,000 jobs and rapid growth, balanced reforms could secure the sector’s sustainability and solidify India’s position as a global gaming leader.Vidushpat Singhania, Managing Partner, Krida Legal
Union Budget 2025
The Union Budget 2025 will be presented on February 1. The Economic Survey was released on January 31. The first part of the Budget session will conclude on February 13. The session will reconvene on March 10 and continue till April 4.
