New Delhi: The government believes that if revenues decline as a result of a new 28 percent tax, a social as well as an economic purpose will be served. Many Indian ministers view wagers on online gaming platforms as a "social evil," according to the revenue secretary on Thursday.

When it announced the tax on Tuesday, the government stunned the $1.5 billion online gaming sector, which has seen a surge in popularity and attracted foreign investment. Executives have issued warnings about job losses and declining salaries.

According to Federal Revenue Secretary Sanjay Malhotra, "Government believes social as well as economic purpose will be served because people will engage in more productive activities if revenues (of online gaming companies) fall due to the new 28 percent tax."

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"A social purpose is at least served if demand is highly elastic and revenues decline significantly," claimed Malhotra, the top official in India's Department of Revenue, which is a division of the Ministry of Finance.

After considering the matter for almost two years, the decision to impose the tax was made. Earlier, a government panel had voiced concerns and suggested "de-addiction measures" like recurrent warnings and advisories while playing games.

Officials have rejected calls for a review of the tax, claiming that no more industry consultation is required.

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There is undoubtedly a moral component to our 28 percent tax on online gaming. Many of the ministers present at the Goods and Services Tax Council believed that wagering on online games was a social vice that should be discouraged, according to Malhotra.
As online gaming has grown so quickly, concerns about addiction have increased.

According to a report by Redseer consultancy this month, fantasy gaming platforms generated over $342 million during Indian Premier League cricket matches, up 24% from the previous year and involving over 61 million users.

It costs as little as 8 rupees (10 US cents) for users to create fantasy cricket teams. Malhotra dismissed worries that the tax would thwart foreign investment and result in job losses.

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According to Malhotra, investments and employment must take into account both societal needs and what is best for the economy as a whole. "No government would support a sector solely for the purpose of investment and employment if the sector was not in the public interest."