New Delhi, 12th July 2023: Ashneer Grover, co-founder of BharatPe and former judge of the reality show Shark Tank India, has voiced his disappointment regarding the recent decision by the GST Council to impose a 28 percent tax on online gaming. In a tweet, Grover expressed his sense of loss, stating that what was once enjoyable in the fantasy gaming industry now feels as if it has been “murdered.” He emphasized the negative impact this decision would have on the industry, highlighting the loss of significant revenue and the need for startup founders to engage in politics to ensure fair representation.
Grover further criticized the government’s expectation that players would invest Rs 100 in a game with a Rs 72 entry fee, only to win Rs 54 after deducting platform fees, and then be subjected to a 30 percent tax deduction on their winnings. He sarcastically commented that players would receive a free swimming pool in their living room during the monsoon under this scenario, implying the unlikelihood of such an outcome.
In another tweet, Grover expressed his irony and amusement at the situation in India. He highlighted the hypocrisy of individuals who proudly talk about making fortunes through land speculation, while simultaneously condemning online gaming for allegedly corrupting the youth. He humorously suggested that the government should introduce a 28 percent GST and 20 percent TCS (Tax Collected at Source) on land purchases.
The decision made by the GST Council to impose a 28 percent tax on online gaming, horse racing, and casinos has faced criticism from industry players. Soham Thacker, founder and CEO of Gamerji, pointed out the adverse effects on user base, revenues, and investor sentiment in both real money gaming (RMG) and non-RMG sectors. He explained that non-RMG companies would experience a slight impact on subscription-driven revenues due to the increased GST rate. Some companies may choose to absorb the impact or consider raising subscription costs. Furthermore, to mitigate the impact on investors, certain gaming companies may relocate their operations outside of India, treating the country as a secondary market.
Previously, the GST only applied to the gaming fee paid by companies, but now the 28 percent tax applies to the entire pool of money, affecting winnings and the overall user experience. Thacker concluded that this decision would setback RMG companies and their user base, potentially slowing down the growth of the gaming industry in India.
The concerns raised by Ashneer Grover and industry experts highlight the potential negative consequences of the 28 percent tax on online gaming. It remains to be seen how the industry and the government will address these concerns and find a balanced approach that supports the growth of the gaming sector while ensuring fair taxation.
