The GST Council’s decision to levy 28% tax on online gaming has claimed its first casualty with online real money gaming platform Quizy announcing it is closing down.

In a recent LinkedIn post, co-founder Sachin Yadav stated that the online gaming firm is bidding farewell to the sector as the recent changes in tax regulations have made the business unsustainable. According to Yadav, it started with the Finance Ministry announcing the removal of TDS exemption limit earlier this year and the increase in TDS rate to 30% on all winnings. Though the company faced a few challenges it was still operating fairly well at the time.

Moving into July, the GST Council announced that the tax rate for online gaming, casinos and horse racing will be 28% on full face value. This turned out to be the fatal blow for the company as it foresees its profitability to be adversely affected due to the undue tax burden, leaving it unsure of its future.

Quizy was founded in 2021 by Yadav and Amit Kumar. The gaming firm termed itself as an information gamifying platform based on day-to-day news developments. The venture had received funding from 100X VC, We Founder Circle, Anchorage Capital Partners, FAAD Network and Capital A & Dholakia Ventures, totaling to $305,000 as per VC Circle.

While the founders have planned to close down Quizy, Yadav said that the love for gaming is still there, and they are looking for new avenues to channelize their creativity and passion for gaming.

Concluding his post, he urged the lawmakers and online gaming firms to work together “to strike a balance that supports innovation, economic growth, and responsible gaming”, explaining further how the online gaming industry in India holds vast potential for innovation and job creation.

The online gaming sector has already urged the government and the GST Council to reconsider the criteria of the tax levy. The GST Council is meeting again today and is expected to finalize how the tax will be levied.