Online gaming company investors planning to request govt to reconsider 28% GST rate

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After the efforts of online gaming companies, some of their large investors are planning to write to the government to share their concerns regarding the GST Council’s decision to levy 28% tax on the full face value amount on online real money games.

Reports suggest that the list of investors include Tiger Global, DST Global, Alpha Wave Global, Matrix Partners India, TPG and Steadview Capital. These are some of the top investors in gaming startups like Dream11, Mobile Premier League (MPL), Games 24×7 and Zupee.

According to people who talked to The Economic Times on the matter, the key concerns remain similar to the ones that have been raised by the online gaming companies and trade associations so far with the hope that the government will rethink their decision.

The investors wish to put forth in no unclear terms that the move will make the gaming industry “unviable”. This was conveyed to the Finance Ministry previously as well, a person aware of the matter said.

The number of gamers in India has reached over 500 million. With GST being levied on full face value, the real money gaming segment is being predicted to become unattractive to the majority of the users and investors.

While there is a possibility that some of the bigger firms might be able to survive, the same cannot be said for emerging startups as they have growing but small user base, and shifting the tax burden will potentially scare them away.

The top officials of online gaming companies are seeking a meeting with government officials to raise the same issue and request the government to reconsider the decision. Moreover, a group of over 100 online gaming firms has also addressed an open letter to the government on the matter.

However, Revenue Secretary Sanjay Malhotra believes that there is no point to reconsider the GST Council’s decision, but the companies are free to share their grievances.