Online skill gaming industry

Online skill gaming companies wrote to Ministry of Finance and all GST Council members, saying high taxation will lead to shutdown of over 120 companies. More than 120 CEOs/founders of online skill gaming companies and game developers along with all the industry bodies have written to the PMO and relevant ministries in the interest of protecting the online skill gaming industry.

Online gaming companies said an increase of GST to 28% on Gross Gaming Revenue/Platform fee will result in a 55% increase in GST quantum. The gaming industry currently supports lakh of direct and indirect jobs, and these numbers will grow substantially in the next few years.

Currently, the industry is paying 18% GST on Gross Gaming Revenue/ Platform Fee. The increasing in the taxation structure will be challenging for the industry, the industry supports this increase to be a contributor to nation-building.

However, for the sector to survive, this tax should be levied on the platform fee/Gross Gaming Revenue that is earned by the industry. This is similar to any other technology service platform, where only the revenue that platforms earn are considered for the purpose of levy of GST.

Today, the online skill gaming, with a $20 billion enterprise valuation, $2.5 billion in revenue, and $1 billion in annual taxes, is set to grow by 30% CAGR to reach $5 billion in revenue by 2025.

A report says, the total number of Indian online gamers grew from 360 million in 2020 to over 420 million in 2023. India's gaming industry attracted FDI of about $500 million between 2014 and 2020, and over $1.5 billion between January 2021 - June 2022.

With this there will be significant job losses and Impact on Livelihoods. Impact on Consumer Affordability and proliferation of the underground black economy and numerous criminal activities.

Going forward, offshore Gambling Sites are going to be the unintended Beneficiaries resulting in substantial tax loss to the government and will expose Indian gamers to harmful offshore gambling websites, which are not accountable to the Government of India.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA