The Indian online gaming sector is soaring exponentially being currently valued at $1.8 billion and it is expected to reach US$ 4-5 billion by 2025 according to the EY – AIGF report. Moreover, online gamers in India are estimated to grow from 360 million in 2020 to 510 million in 2022. Currently, there are over 400 gaming start-ups at present that are accelerating the growth of the sector.

A game of chance attracts a higher GST rate of tax vis-à-vis a game of skill. Online games operate either on the ‘rake fee’ model wherein the gaming platform charges a rake fee for facilitating games or ‘freemium’ models wherein the gameplay is free but additional features may require users to purchase specific items for a monetary price. A rational imposition of Goods and Services Tax (‘GST’) is therefore vital for the sustainability of this industry.   

Roland Landers, CEO, All India Gaming Federation said, “The online gaming industry is growing at an impressive CAGR of 25% – 30% and holds significant potential for overall economic growth, job creation and contribution to the government’s vision of a trillion-dollar digital economy by 2025. To enable the industry in realising its peak growth potential, it is imperative that the GST regime for the online gaming industry is kept rational and at par with other technology platforms and services. It is important to highlight that regressive taxation of these emerging sectors may only make the business unsustainable in India. Our recommendation is that the tax authorities should align its policies with internationally accepted principles of taxing the online gaming sector and provide certainty to the industry.”

Talking about crystallizing the GST levy mechanism, Mr. Landers further added, “The valuation mechanism in levying GST should be clearly outlined to avoid any ambiguities and potential litigations leading to tax demands as the same will adversely impact the business plans, operations, and entry of new players in the industry.”

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Games24x7 is one of India’s largest online skill gaming companies which runs My11Circle and RummyCircle. It is no surprise that India today has a large and rapidly growing gaming market. The gaming industry is witnessing unprecedented growth as the market is estimated to reach USD 3.9 billion by 2025. Online gaming has been gathering a lot of popularity, especially skill games and fantasy sports. The recent trend witnessed is a steadfast increase in skill games across the country due to better accessibility to smartphones and cheap data prices which in turn is helping the sector gain broader reach across the country, thereby spurring its growth. In the Union budget of 2022, we expect the government to lay more focus on this sector.

Speaking about the growth trajectory of the online gaming sector, Bhavin Pandya, Co-founder & Co-CEO, Games24x7 shares, “Online gaming is a sunrise sector with immense investment, employment, and revenue potential. The rise of the gaming sector also benefits the growth of other sectors that are the focus of the government including semiconductor, fintech, telecom and IoT.”

According to him, gaming has the potential to transform the way new India is learning.  Gamification is increasingly used to improve education, training, and skill development.

Established players in the online gaming sphere have the wherewithal to support a variety of professions from budding entrepreneurs to established technologists and data scientists which will further accelerate growth and make India an exporter of gaming content and IPs.

“The sector eagerly awaits progressive policy structure from the government as well as fair treatment from the GST council. With proper support, the online gaming sector can give a big impetus to the government’s drive to create a USD 1 trillion digital economy,” he adds.

 Witzeal Technologies is a new-age gaming Technology Company that specializes in creating and introducing futuristic games and features in the real money gaming segment. Its multi-gaming platform “Big Cash” offers 17 skill-based real money games (RMG) in Cards, Fantasy, and Casual games developed in-house.Witzeal is also a proud winner of the Facebook Audience Network Grand Prize and has been selected for the Bootstrap track of the FbStart Program.  

India’s online gaming industry has the potential to generate $2 billion by 2023. Given the fact that India is the world’s fourth largest online gaming market, the sector requires a stable regulatory and legal environment to allow it to develop swiftly and reach its full potential. We expect the government to place a greater emphasis on this sector in the Union budget for 2022. 

Mr. Ankur Singh, CEO & Founder of Witzeal Technologies Pvt. Ltd also weighed in on his thoughts on the budget that the industry requires. He shared, “The Indian gaming industry is one of the fastest-growing industries in India from a new age technology perspective currently. As per the report launched by the EY- AIGF in 2021, online gamers are estimated to grow from 360 million in 2020 to 510 million by 2022. Moreover, the initiative of the Government of India that promotes internet access to citizens at affordable rates and smartphone penetration has been a game-changer for this industry. Now we are expecting that, in realizing its full potential for growth in upcoming years, the government’s focus on this sunrise sector will further help in keeping with the government’s objective of generating unicorn start-ups and act as a catalyst to contribute immensely to the 5 trillion economy target by 2024-25.”

Hon’ble Prime Minister Narendra Modi’s announcement of declaring a start-up day (on 16th January) has been an extremely encouraging move further pushing the Digital India initiative by the central government of India.

“Taking inspiration from this growth in the upcoming budget we expect foresighted policies which would intensively nurture the new age technologies including gaming technologies that are sustainable for the future growth of the economy of the country and to attract international investors to invest in the Indian market in the upcoming years. It will also help in expanding businesses in other countries as well as generate increased revenue to the exchequer of India,” he concluded.