Nazara, MPL, Winzo and other online gaming firms seek review of 28% GST in open letter

Around 130 on-line gaming corporations and business associations, Mobile Premier League (MPL), Nazara Technologies, Gameskraft Technologies and WinZO Games, have collectively appealed for reconsideration of the suggestions of the products and providers tax (GST) Council to impose a 28% tax on the complete face worth of on-line gaming. They have signed an open letter urging for a “viable and progressive GST regime”.

“The proposal to charge GST on the full deposit value will reverse the growth trajectory of the industry. This would potentially have devastating implications (including shutdown of businesses) for MSMEs (micro, small and medium enterprises) and startups that may not have the capital reserves to withstand such a sharp tax increase,” mentioned the letter.

Also learn | Online gaming’s tax troubles

The letter, a replica of which has been seen by ET, was additionally signed by gaming business our bodies such because the All India Gaming Federation (AIGF), E-Gaming Federation (EGF), Federation of Indian Fantasy Sports (FIFS) and All India Game Developer’s Forum (AIGDF) had been additionally signatories to the letter.

While the AIGF represents corporations akin to MPL, Zupee and Paytm First Games, EGF represents corporations together with Games 24×7 and Junglee Games. FIFS is backed by platforms akin to Dream11 and Fantasy Akhada, along with a dozen different fantasy sports activities operators.

The signatories additionally mentioned that the imposition of GST on full worth would “debilitate potential investors, both domestic and foreign, from considering the online gaming sector as a viable investment destination”.

Also learn | GST tweak might value 40 on-line gaming corporations Rs 10,000 crore

They mentioned, “It may be noted that the impact will not only be on attracting fresh capital in gaming but would have a far wider impact on the Indian startup ecosystem as a whole, as the majority of these financial institutions invest across sectors and a favourable regulatory landscape is one of the single most important drivers for FDI (foreign direct investment). In addition, the current $2.5 billion plus in investments is at stake basis this decision.”

ET reported Saturday that on-line gaming corporations are in a huddle and are deliberating subsequent steps, which embrace in search of clarifications from the federal government on applicability of the GST. These embrace queries akin to whether or not the tax will probably be levied if a consumer enters a brand new contest with the winnings from a earlier one.

Also learn | Online gaming corporations search extra readability on GST

In the open letter, the businesses mentioned that the net ability gaming sector in India has a $20 billion enterprise valuation and it generates annual income of $2.5 billion. The business is predicted to develop at a 30% compound annual progress charge to achieve annual income of $5 billion by 2025, they mentioned.

Stay on high of expertise and startup news that issues. Subscribe to our each day publication for the newest and must-read tech news, delivered straight to your inbox.