Indian online gaming companies planning to move abroad to avoid a new 28 percent tax on the industry risk violating the country’s currency laws, Vivek Johri, head of the indirect tax department, said Thursday.
New Delhi does not plan to implement the tax retroactively, he said, in response to speculation that it might.
The government on Tuesday announced the $1.5 billion (almost Rs. 12,300 crore) tax on the online gaming industry, which has gained popularity in recent years, attracting foreign investment.
The industry has warned of job losses and reduced profits, while analysts have said some may explore moving abroad.
Relocating online gaming companies to avoid paying taxes on the revenue they collect from customers will not be easy, said Johri, chairman of the Central Board of Excise and Customs (CBIC).
“It’s going to be a risky proposition,” he said. “It’s actually not legal to send money (to a foreign country) in the name of online gaming, so they will use another (way) and that will further expose them to legal action.”
Overseas online gaming companies providing services in India will also have to comply with regulations being formulated by India’s electronics ministry, which may require local registration, he said.
Despite the impact of the higher tax on gambling costs, players who can afford more and are hooked on such games will continue to participate, Johri said.
He said the new tax would take effect after India’s parliament ratifies the changes in the coming weeks.
© Thomson Reuters 2023
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