India Hikes GST on Real Money Gaming and Betting to 40%

India’s Goods and Services Tax (GST) Council has given the green light to a big jump in taxes on activities like online real money gaming, casinos, lotteries, race clubs, and betting. The rate will climb from 28% to 40% starting September 22. This change is the second major update in less than two years.

Gambling Services Hit with 40% GST as Household Games See Relief

The Council finalized the change at its 56th meeting in New Delhi this week. Officials said the higher rate puts these services in the same group as “sin goods,” which already cover alcohol, tobacco, and pan masala. The government believes these activities have a negative impact on society and need more taxes, reported The Economic Times. The revised structure will still allow input tax credit.

This news comes just a few weeks after Parliament passed the Promotion and Regulation of Online Gaming Act 2025 (PROGA). This law prohibits real-money online games across the country. It cites risks of fraud, money laundering, and potential use for illegal funding. The law exempts only esports and casual games not tied to betting.

Even though the Council raised taxes on gambling-related services, they cut the tax rate for games people play at home for fun. Now, things like chess boards, carrom sets, playing cards, and other family games will have a 5% GST, which is lower than the 12% they used to have. The people who make these rules said this difference shows the government wants to push people towards games that do not involve money, while trying to stop gambling.

Gaming Sector Faces Closures, Legal Challenges, and Tax Disputes

The gaming industry reacted with worry. Big companies are already struggling after the government banned real money platforms, which led to many shutdowns in August. For instance, Flutter Entertainment closed its Junglee site right after PROGA took effect. Groups like the All India Gaming Federation (AIGF) and the E-Gaming Federation (EGF) have taken the law to court. They say the rules go too far and might destroy a growing industry.

The Supreme Court is also looking at another case about back taxes that could reach INR 2.5 lakh crore ($30 billion). Companies like Gameskraft and Delta Corp are part of this fight. The outcome could change the industry’s financial future, no matter what happens with the latest policy change.

Experts are not sure how the government will figure out the 40% tax. If they tax deposits instead of the money casinos make, many businesses might go under. This could lead to more court fights.

States did not object to the tax increase, but it will hit places like Goa and Sikkim hard. These states rely a lot on money from casinos and race tracks to fund their budgets.

The tougher taxes and ban on real money games show India is taking a firm stance. This puts a lot of pressure on game companies.