IPL Betting Frenzy Causes NCPL to Consider Moderating Transaction Volume
NPCI - the National Payments Corporation of India – announced a move to ban all gaming transactions below ₹ 50 via the Unified Payments Interface (UPI). The measure comes as an attempt to bring relief to the payments system. Indian Premier League season is well underway and during cricket matches there are massive spikes of low-ticket transactions on the UPI channel. Banks are overwhelmed by the transaction load, experience outages and percentage of technical declines (TD) rises.
Gaming merchants are accepting bets as low as ₹ 1, but low-ticket transactions are perceived as a risk to the UPI system and even a “misuse”. Sudden spurts to processing loads clog banks and render them unable to process other forms of payments.
A number of sources from the gaming industry fear the move by NPCI – the body governing all retail payment systems in Bharat – will deliver a major blow to their business. Real money gaming is dependent on micro transactions. Players don’t pay regular subscription fees every month. Instead they pay small amounts, typically lower than ₹ 100, during actual game play.
Taxation Revenues Will Also Be Affected
The original plan was said to have been to ban all gaming transactions under ₹ 250, but gaming industry representatives have managed to negotiate the ceiling down. Still, more than 50 per cent of all transactions of a certain gaming merchant are under ₹ 50.
The Income Tax and Finance Acts set a flat 30% tax on all income from online or offline casinos and gambling. There are surcharges of 10 or 15 per cent for large earnings exceeding ₹ 50 lakhs or ₹ 1 crore respectively. The Health and Education Cess of 4 per cent is payable by all persons liable to income tax. Thus, the final tax rate for casino and gambling earnings below ₹ 50 lakhs is 31.2 per cent.
The non-taxable minimum of ₹ 10,000 means that revenue form income tax would hardly be affected by the low-ticket UPI transaction ban. This is not the case with indirect taxes, however.
The Goods and Services Tax (GST) is levied on all goods and services in India. The law specifically defines a separate entertainment event and services category including casinos, racecourses and such, taxing them all at a rate of 28 per cent. GST is charged and paid by the registered merchant. Income loss by industry directly means revenue loss from GST.
Online Casinos Diligent with Their Taxes
The UPI system is also used within the Indian Online Casino sector to process payments. Reputable online casino merchants such as PureWin.com strive for legality. Gambling platforms acting on the Bharat market are making efforts to provide games and entertainment which are traceable back to the player, both to answer desi user demand and to respect local taxation legislation.
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