India Gambling — Tax: What is the tax take?

## Licence Fees Goa (Land-based and Offshore Casinos): A licence application for a land-based casino in a five-star hotel or an offshore casino must be accompanied by an application fee of INR 50,00,000 (approx. USD 52,661), irrespective of the number of tables or machines installed in the licenced premises or the size or capacity of the vessel. The following annual licence fees are payable: For onshore casinos, the annual licence fee varies based on the size of the casino. The fee ranges from INR 11 Crore (approx. USD 1.15 million) to INR 44 Crore (approx. USD 4.63 million) for casinos between 110 square metres to 1100 square metres. For offshore casinos, the fee varies based on the passenger capacity of the vessel. The fee for a vessel with a passenger capacity of up to 220 is INR 27.5 Crores (approx. USD 2.89 million), whereas for a vessel with a passenger capacity of between 220 and 440 it is INR 33 Crores (approx. USD 3.4 million) and for a vessel with a passenger capacity of more than 440 it is INR 44 Crore (approx. USD 4.63 million). Sikkim (Land-based casinos): The provisional licence fee is INR 1,00,000, payable prior to issuance of the licence. The fee for a regular licence is INR 5,00,00,000 for a period of five years. Further, an annual licence fee is payable at such rates and intervals as may be notified by the State Government. Any required minimum guarantee/ security deposit. - Goa: A licencee is required to deposit INR 50,00,000 as a security deposit at the time of grant of a new licence and INR 25,00,000 at the time of renewal. - Sikkim: A licencee is required to furnish a bank guarantee equivalent to the gaming fee notified by the State Government from time to time, as a security deposit. The bank guarantee must remain valid throughout the term of the regular licence. ## Taxes There are no license taxes in most Indian States. ## Goods and Services Tax The GST regime for the online gaming industry has undergone several changes in the recent past. Prior to October 1, 2023, actionable claims arising from betting and gambling were subject to GST at 28% under Rule 31A of the CGST Rules. However, the applicability of GST to online games involving monetary stakes, particularly games of skill, and the corresponding valuation of such transactions remained contentious. The prevalent practice in the industry was to pay GST only on the service fees received by the platforms. However, the tax department levied GST on the entire face value of bets. With effect from October 1, 2023, amendments to the Central Goods and Services Tax Act, 2017 (“CGST Act”) and the Integrated Goods and Services Tax Act, 2017 (“IGST Act”) introduced a specific framework for the taxation of online money gaming (“Amendments”) through Rules 31B and 31C. The Amendments introduced a definition of ‘online money gaming’, which includes online games in which players pay or deposit money or money's worth, including VDAs, in expectation of winning money or money's worth, irrespective of whether such games involve skill, chance or both, or are permissible under applicable law. The Amendments also clarified that actionable claims arising from online money gaming, casinos and horse racing constitute specified actionable claims liable to GST. Corresponding valuation provisions were introduced under Rules 31B and 31C of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”). Under Rule 31B, the taxable value of online gaming transactions is determined based on the total amount paid or payable to, or deposited with, the supplier by or on behalf of a player, including in the form of VDAs. Winnings redeployed by players without withdrawal are not treated as fresh deposits for valuation purposes. Subsequently, the GST rate applicable to specified actionable claims, including betting, casinos, gambling, horse racing, lotteries and online money gaming, was increased from 28% to 40%, with effect from September 22, 2025. Accordingly, the applicable GST rate must be determined with reference to the relevant period of supply. As explained above, in Gameskraft Judgement, the Supreme Court upheld the constitutional validity of GST on actionable claims arising from betting and gambling, including online gaming involving monetary stakes. The Court further held that the 2023 amendments and the corresponding valuation provisions (Rules 31B and 31C) are clarificatory in nature and retrospective in the manner indicated in the judgment. Valuation of online gaming and fantasy sports is accordingly governed by Rule 31B, and of casinos by Rule 31C. Further, as noted above, the Supreme Court in Fanmade11 Fantasy Sports treated the writ petition as covered by Gameskraft and directed the petitioners to alternative statutory remedies before the lower authorities instead. Separately, the Amendments also exclude online money games from the meaning of Online Information Database Access and Retrieval (“OIDAR”) services. OIDAR services have been defined to mean services whose delivery is mediated by information technology over the internet or an electronic network and whose nature renders their supply essentially automated and involving minimal human intervention. Considering the exclusion of online money games from OIDAR services, online gaming operators qualifying as suppliers of online money games should not be considered as supplying OIDAR services in respect of such online money games supplies. Lastly, there is also a requirement of obtaining mandatory registration of offshore online money games operators to discharge their GST liabilities. The registration may be made under a ‘Simplified Registration Scheme’ which allows the offshore operator to obtain a single registration (instead of multiple registrations for supply in different states). In absence of such registration, or non-compliance with the applicable GST payment obligations, the GST department may block any information generated, transmitted, received or hosted in any computer resource used for supply of online money games by such offshore online money games operator. Notwithstanding the foregoing GST registration framework, the offering of online money games is prohibited under the Online Gaming Act, and registration under the IGST Act does not authorise such activities. Further, the prohibition does not extinguish any GST liabilities arising from transactions undertaken prior to the commencement of the Online Gaming Act, which shall continue to be governed by the applicable GST laws. ## Income Tax Act Indian income-tax law provides that winnings from lotteries, crossword puzzles, card games, gambling, betting and other specified games should be subject to tax at flat rate of 30% without allowing any deductions or exemptions. Withholding tax obligations are also imposed on operators. Under the Income-tax Act, 2025 winnings from specified offline games (such as lottery, crossword puzzles, races, card games, and gambling or betting) and net winnings from online games are taxable at 30%. Corresponding withholding obligations are prescribed under Section 393(3) (Table, Serial Nos. 1 and 2). In respect of specified offline gaming winnings, tax is generally required to be withheld where the winnings exceed INR 10,000 in a single transaction. In respect of online games, tax is required to be withheld on net winnings in a user's account at the time of withdrawal and on any remaining net winnings at the end of the tax year, without any minimum monetary threshold. Where winnings are wholly in kind, or partly in cash and partly in kind and the cash component is insufficient to discharge the withholding obligation, the person responsible for paying the winnings is required to ensure that the applicable tax has been paid before releasing such winnings. Notably, the prohibition of online money games under the Online Gaming Act does not extinguish income-tax liabilities or withholding obligations arising from transactions undertaken prior to its commencement. Other tax provisions The Income-tax Act, 2025 also provides for the taxation of income arising from the transfer of VDAs at a rate of 30%, plus applicable surcharge and cess. No deduction is permitted except for the cost of acquisition, and losses arising from VDA transfers cannot be set off against income under any other head or carried forward. Further, Section 393(1) (Table, Serial No. 8(vi)) requires tax to be deducted at source at 1% on consideration paid to a resident for the transfer of a VDA, subject to the prescribed thresholds and conditions. The statutory definition of a VDA is broad and encompasses cryptocurrencies and certain tokens and other digital assets. However, it excludes Indian and foreign currency, central bank digital currencies, and digital assets specifically notified as excluded. Whether in-game currencies, digital collectibles, loot-box rewards or promotional digital assets qualify as VDAs depends on their specific characteristics, manner of issuance and use, and the applicability of any statutory exclusions. Accordingly, each category of asset should be assessed on a case-by-case basis. Where a gaming operator pays winnings arising from an online game, the applicable withholding provisions under Section 393 governing online game winnings should be considered. If the net winnings are wholly in kind, or partly in cash and partly in kind such that the cash component is insufficient to meet the tax liability, the operator should ensure that the tax has been paid before releasing the winnings. This requirement also applies where the winnings are distributed in the form of VDAs. ## Software/ B2B Taxation The tax treatment of software licensing and other business-to-business arrangements depends on how the transaction is structured. The key question is whether it involves (i) a licence of software or intellectual property, (ii) an outright assignment of intellectual property rights, or (iii) the provision of software or technology-related services. Where a payment to a non-resident licensor is characterised as royalty under Section 9(6) of the Income Tax Act, 2025 and is taxable in India, tax is chargeable at the domestic rate of 20% plus applicable surcharge and health and education cess and is subject to withholding. The provisions also allow the non-resident to rely on the applicable Double Taxation Avoidance Agreement (“DTAA”) to the extent it is more beneficial, subject to relevant conditions for treaty eligibility, including but not limited to furnishing a tax residency certificate. The domestic definition of royalty expressly includes the transfer or grant of rights to use computer software. However, the applicable treaty may define royalty more narrowly. In Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT (2021) 432 ITR 471 (SC), the Supreme Court held that payments for software did not constitute royalty under the relevant treaty provisions where the arrangements did not grant rights in the copyright itself. Accordingly, characterisation should be determined by examining the rights actually granted under the agreement, read with both the domestic and applicable treaty definitions. Further, the applicability of the General Anti-Avoidance Rule (“GAAR”), should also be considered where relevant. Payments to non-residents for services that involve neither an outright assignment of IP nor a licence of software may be taxable as fees for technical services (“FTS”) under Section 9(7), also taxed at 20%. The applicable DTAA must be examined separately: some treaties do not contain an FTS article, while others restrict the definition to services that make available technical knowledge, experience, skill or know-how. Where the payment is not taxable as FTS or royalty under the applicable treaty, it may be taxable as business profits only if the non-resident has a permanent establishment (PE) in India, subject to the treaty's specific provisions and any other applicable rules. For GST purposes, the import of software licensing or technology-related services by an Indian recipient is generally treated as an import of services under the IGST Act, 2017. Where the supply is taxable and the reverse charge mechanism applies, GST is generally payable by the Indian recipient at the applicable rate, commonly 18%, subject to the nature of the supply and any applicable exemptions or special provisions. OIDAR services supplied by a foreign supplier to non-taxable online recipients in India are subject to separate rules, including supplier registration and tax-payment obligations where applicable. An Indian business recipient may be eligible to claim input tax credit, subject to the conditions under the GST law.