Central govt likely to lose Rs 10,000-12,000 Cr in annual revenue due to ban in real money gaming

The central government is likely to lose between Rs 10,000 and Rs 12,000 crore in annual revenue due to the ban on real money gaming (RMG), a senior government official told Moneycontrol.

There was a sharp rise in revenue collection since October 2023, when the 54th GST Council imposed a blanket 28% tax on all online games, both skill and chance-based.

Earlier, an 18% GST was imposed on skill-based games.

"We have to forego the revenue because of the ban (on RMG), but the GST cuts –effective from September 22nd—will hopefully offset some of the loss," the official said.

From September 22nd, online money gaming will attract a 40% GST, as against the 28% levy applicable at the moment.

"There is no estimate made of what revenue could be gained as of now," the official told MC, adding the ban was necessary as it was a social evil.

"The government was clear that real money gaming can’t be allowed, many households are in severe debt. States also wanted the ban to be imposed," he added.

The Promotion and Regulation of Online Gaming Act, 2025, introduced by the Parliament in August, restricts all forms of online real money games while promoting e-sports and other online games.

The real money gaming ban

The Act prohibits any advertisements related to online money games and prevents banks and financial institutions from transferring funds for any of such games.

Tax experts say that the Indian government’s expectation of a 40% GST rate will compensate for the revenue loss from imposing a ban on the online gaming industry.

“Even if casual and skill-based games remain taxable at 40%, their gross gaming revenues are significantly smaller. A higher rate on a smaller base cannot offset the structural loss. Moreover, higher GST on non-RMG segments may also depress user participation, leading to a smaller pie over time,” said Prateek Bansal, Partner, White & Brief - Advocates and Solicitors.

According to Banal, while the surge in rate looks arithmetically compensatory, the underlying taxable base has reduced dramatically for a neutral revenue effect.

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