Indian online gaming companies are considering moving their operations overseas to avoid a newly imposed 28 percent tax on the sector. However, Vivek Johri, head of the indirect taxes department, warned that this could potentially violate the country’s foreign exchange laws. Contrary to speculation, the tax will not be implemented retrospectively, according to Johri.
The announcement of the tax levy on the $1.5 billion online gaming industry has caused concern among companies, who fear job losses and reduced earnings. Some analysts predict that these companies may explore the possibility of relocating to other countries. However, Johri, chairman of Central Board of Indirect Taxes and Customs (CBIC), emphasized that evading tax by relocating would present risks, as transferring money under the guise of online gaming is illegal and could lead to legal consequences.
Johri also mentioned that overseas online gaming companies providing services in India would need to comply with regulations set by the country’s electronics ministry, which may require them to register locally.
Despite the impact of the higher tax on gaming costs, Johri believes that avid gamers who can afford to pay more will continue to participate in online gaming. The new tax will come into effect once it is ratified by India’s parliament in the coming weeks.
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