As the GST Council imposes a 28% tax, shares of Delta Corp. and Nazara Tech plunge up to 28%

Online gaming is subject to a 28% GST in early Wednesday trading. Following the GST Council’s approval to impose a 28% GST on online gambling, horse racing, and casinos at full value, Delta Corp shares first began at its 10% lower circuit of Rs 222.15 before falling as much as 28% to Rs 178.20, close to their 52-week low.

Nazara Technologies’ shares first shattered over 14%, in contrast.

The GST Council resolved on Tuesday to impose a 28% tax on the total amount of money consumers pay in a blow to the nation’s online gaming sector. Online gaming will also be subject to GST, which will be levied regardless of whether the game is based on skill or chance.

Regarding the increase, Nazara Technologies stated that the decision by the GST Council to impose a 28 percent goods and services tax (GST) on online gaming will only be applicable to the skill-based real money gaming portion of its business, which made up 5.2% of the company’s overall consolidated revenue during FY23.

The firm said in an exchange statement that it “will take proactive steps to mitigate any potential impact to this segment of our business, and we anticipate minimal impact to our overall revenues.” The statement said, “The company remains committed to its growth agenda and will continue to pursue organic and inorganic opportunities across the various operating segments.”

GST Council Meeting Results

“I am pleased to report that a decision has been made. The GST legislation will be modified in certain ways. Nirmala Sitharaman, the finance minister, said that internet gambling, horse racing, and casinos would all be taxed at a rate of 28% and on their full face value.

The finance ministry stated that the GST law will be amended to specifically state that tax will be applicable on the face value of the chips purchased in casinos, on the full value of bets placed with bookmakers/totalizers in cases of horse racing, and on the full value of bets placed in cases of online gaming.

Additionally, there would be no differentiation between games that demand skill and those that rely on chance when it comes to how the GST on online gaming is imposed.

Players in the industry voiced their worries. An exceedingly regrettable choice, according to Malay Kumar Shukla, secretary of the E-Gaming Federation, “as charging a 28% tax on full face value will lead to a nearly 1,000% increase in taxation and prove catastrophic for the industry.”