Budget 2025: Real-Money gaming companies advocate for tax reforms and policy rationalization

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The Indian real-money gaming sector has called for rational tax policies and the resolution of retrospective taxation issues in the upcoming Union Budget 2025-26, scheduled to be presented by Finance Minister Nirmala Sitharaman on February 1. Industry stakeholders emphasize that a balanced approach to taxation could sustain growth, enhance economic contributions, and foster responsible gaming practices.

Retrospective Taxation: A Barrier to Industry Stability

Anuraag Saxena, CEO of the E-Gaming Federation (EGF), highlighted the sector’s economic potential, stating, “With the potential to contribute ₹75,000 crore in GST over the next five years, the online gaming industry is a crucial catalyst for economic advancement.”

Despite recent Goods and Services Tax (GST) reforms offering clarity, retrospective tax demands have unsettled the industry. These demands, totaling ₹1.12 lakh crore for periods before October 1, 2023, have introduced uncertainty and hindered investor confidence, according to Saxena.

EGF, representing major operators like Games24x7, Head Digital Works, and Junglee Games, submitted a representation to the finance ministry in December 2024. The representation outlined concerns about the “precarious future” of the sector due to taxation uncertainties. Saxena also warned against potential revenue loss to the exchequer from the shutdown of legitimate businesses facing retrospective tax demands.

Unlocking Economic and Innovation Potential through Policy Reforms

The Supreme Court provided temporary relief on January 10 by staying 71 show-cause notices issued for alleged GST evasion. These cases, involving retrospective taxation, are set for a final hearing on March 18.

Roland Landers, CEO of the All India Gaming Federation (AIGF), echoed the need for reduced GST rates and clearer taxation policies, noting that such measures could spur innovation and establish India as a global leader in gaming.

Deepak Gullapalli, founder of Head Digital Works, urged rationalization of tax deducted at source (TDS) norms for real-money gaming winnings. He proposed aligning TDS rates with other sectors to enhance liquidity for consumers while maintaining compliance.

Industry’s Path to Sustainable Growth

The Indian gaming industry has shown robust growth, reporting revenues of $3.8 billion in FY24, a 22.6% increase from $3.1 billion in FY23, according to Lumikai, a gaming venture fund. Of this, $2.4 billion came from the real-money gaming segment. The report projects that the sector could reach $9.2 billion in revenue by FY29, growing at a compound annual growth rate (CAGR) of 20%.

WinZO Games co-founder Paavan Nanda stressed the importance of aligning regulation and taxation with Prime Minister Narendra Modi’s vision to attract significant foreign direct investment (FDI). This would support the development of high-quality games, talent, and India’s competitive edge in the global gaming market.

As the industry anticipates the Union Budget 2025-26, stakeholders remain hopeful that the government will address their concerns, paving the way for sustained growth and innovation in India’s burgeoning gaming sector.

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