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Already, over 100 online gaming companies and a few federations have written to the government, asking them to urgently reconsider the 28% GST levy on the full value deposited with these platforms
Prominent investors in Indian online gaming, namely Tiger global, Alpha wave Global and Steadview capital have expressed grave concerns about the Indian online gaming space becoming completely inaccessible post the GST council’s decision to charge 28% GST. Notably, this tax will be charged on the full face value of the amount deposited by players.
This comes even as Rajeev Chandrasekhar, who heads the Ministry of Electronics and Information Technology (MeitY) recently said in a media interaction that the GST council will be urged to reconsider their decision. However, he is unlikely to meet a friendly sight, since the council unanimously voted for this, warranting no further deliberation for the time being.
Already, over 100 online gaming companies and a few federations have written to the government, asking them to urgently reconsider the 28% GST levy on the full value deposited with these platforms.
In an open letter, poignantly titled “death by a thousand cuts”, the signatories of the letter, which included prominent names like Gameskraft, Nazara, and federations for gaming, e-gaming and fantasy gaming, the members noted that this move will certainly kill 99% of the industry in less than 6 months
“The user, who is already required to pay 30% income tax on winnings, will be unable to bear such a large increase in cost and will shift to black market operators to avoid the increase in playing costs and reduction in the winning pool. This will result in proliferation of the underground black economy and numerous criminal activities,” the letter noted.
According to media reports, these investors in discussion hold stakes in the cash-rich, profitable and popular ventures in this space like Dream11, Mobile Premier League and more. They had written to the ministry last year as well, asking the government to levy tax on the company’s gross gaming revenue (GGR), and not its full value.
A year later, the demand remains the same. Investors are willing to pay GST on a platform’s GGR (the fees it charges for facilitating the game), and not on full deposit value. Online and real-money gaming has been attracting foreign funds, raising over $2.8 billion from both national and international investors. Many of them see India as a booming market, given that a FICCI-EY report estimated that the number of gamers in India is projected to rise to 500 million in the next 2 years.