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Gaming studios call for clear distinction between video games and real money gaming

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Over 45 video game companies have written to the Prime Minister’s Office (PMO), the Ministry of Electronics and Information Technology (MeitY), and the Ministry of Information and Broadcasting (I&B Ministry) seeking a distinction between video games and real money gaming.

This comes after recent developments on the GST front as the council have announced that online real money games will be taxed at 28% on full face value. Revenue secretary Sanjay Malhotra have also clarified that free-to-play or paid video games will be tax at 18% only.

As per the letter seen by moneycontrol, despite several statements, the online real-money gaming industry is associating themselves with video games and esports and claiming that the entire gaming industry will be affected, which is not entirely true.

Gaming companies have asked for a proper distinction between video games and real money games as it is also differentiated on the international front with games involving wagering termed as iGaming with no distinction in skill or chance.

Since wagering games are also referred to as online gaming along with esports and video games, international firms looking to invest in video game development companies might also get the wrong idea of the tax rate affecting the whole industry.

“This has resulted in hesitation to invest in Indian video game companies and discouraged potential investments, co-productions, and strategic partnerships,” the letter added.

While gamers already know the difference between real money gaming and video games, it is important to have the differentiation in the rules written too, SuperGaming co-founder Roby John said.

SuperGaming is currently developing India’s homemade battle royale game called ‘Indus Battle Royale’. The game uses inspiration from Indian culture and history and gives a great example of how India can utilize its heritage and make games that will be played across the globe.

Several other studios are often hired by international studios, like Capcom, Ubisoft, etc., for game asset generation. Exchanging knowledge with these international companies will help in better game development and improve FDI in the video game and esports sector.

The letter says, “Our earnest desire is to actively engage in a dialogue to work with the regulators to establish policies that recognize the unique characteristics of Video Games, promote investor confidence, and enable a safe and secure ecosystem for Indian gamers engaging in interactive entertainment arts,” while asking for an opportunity to discuss the future of video game and esports industry.

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