According to Hike Founder and CEO Kavin Bharti Mittal, the increase in GST has created financial challenges for the company. Despite being in good shape, they have had to make adjustments to absorb some of the additional costs. As a result, Hike/Rush had to reduce their workforce.
Hike’s investors include Tencent, Foxconn, Bharti Group, Tribe Capital, Polygon, Flipkart co-founder Binny Bansal, entrepreneur Bhavin Turakhia, and Cred Founder Kunal Shah. The gaming platform boasts 5.2 million monthly active users and distributes over $308 million to winners annually.
While Hike and Mobile Premier League have downsized their workforce, other small gaming startups like Quizy have gone a step further and closed down completely.
Addressing the impact of the new GST rule, MPL founder and CEO Sai Srinivas stated that the company’s tax burden would increase by 350%-400%. In order to survive and maintain viability, the company has had to make difficult decisions and reduce expenses.
Unfortunately, the gaming industry has only received minimal relief. The recent GST Council meeting resulted in a decision to tax the total deposits made for playing online games at a rate of 28%, rather than taxing each individual bet. However, this decision will be reevaluated within the next six months. The GST will be imposed starting October 1st.
In conclusion, the Indian online gaming industry is facing challenges due to the increased GST rates. Companies like Mobile Premier League and Hike/Rush have had to lay off employees in order to mitigate the financial impact. While the industry awaits further decisions on taxation, it is clear that the current situation has caused disruptions and uncertainties within the gaming startup ecosystem.
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Alex Smith is a writer and editor with over 10 years of experience. He has written extensively on a variety of topics, including technology, business, and personal finance. His work has been published in a number of magazines and newspapers, and he is also the author of two books. Alex is passionate about helping people learn and grow, and he believes that writing is a powerful tool for communication and understanding.
