28% GST: Online gaming investors write to PM Modi, seek meeting

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A total of 30 domestic and foreign investors in the online gaming sector have now written to the Hon’ble Prime Minister Narendra Modi asking for reconsideration on the GST rates for online gaming.

The investors have complained that the GST council’s decision to increase the tax rate on full face value, bundling them with games of chance, is wrong and is against constitutionally protected games of skill.

According to the companies, their investments were made to make the country gaming capital of the world. They also wanted to create jobs and supporting the Animation, Visual Effects, Gaming, and Comics (AVGC) sector in India.

Talking about the contribution, the investors wrote that real money gaming (RMG) is the largest gaming sub-sector for the gaming industry, which brought in $2.9 billion revenue in 2022. This made it possible for India to have over 400 gaming startups with investments from several foreign investors.

The current changes to GST will push back these foreign companies from investing in these gaming firms. Furthermore, they also wrote that the gaming sector is expected to contribute Rs 4,500 crore to the ongoing year.

Other countries also follow the taxation on gross gaming revenue model, they said. In fact, the UK only charges 15% tax on the GGR. Taxing on full face value will only lead to destruction of startups and the sector.

Citing the effects, the investors said that the decision will result in loss of over 50,000 jobs, $1 billion in advertisements and a heavy blow to the entertainment and media industry.

Companies will be forced to move offshore and shift tax burden on users, which also isn’t a feasible move. The sector is currently an example of “Aatmanirbhar Bharat” (Self-dependent India) and has the potential to make India reach the trillion dollar digital economy mark.

If the tax rate is levied on full face value, the tax burden will increase by over 1300%. This makes the gaming industry unviable for both startups and users. This will also result in even less winning to users.

The investors have also asked for a brief meeting with the Prime Minister and other Govt officials to discuss the matter. They say that they will work out a solution that is desirable for both parties.