The fast-growing industry, which has surged in popularity in recent years, has labelled the move as ‘catastrophic’, amid fears that the change might deter foreign investment and will affect up to 1,000 companies.

Until now, companies paid a small tax on the fee they charged for offering real money games. But the change, which was announced last week, will impose a 28% tax on the entire amount collected from players in every game, up from the current 18%.

The Goods and Services Tax (GST) Council will charge the tax on online gaming, casinos, and horse racing, on the basis that there should be ‘no distinction’ between a game of skill and one of chance.

Aaditya Shah, chief operating officer at IndiaPlays, said: ‘The implementation of the tax rate will bring significant challenges to the gaming industry. This higher tax burden will impact companies’ cash flows across the board.’

Acc