In a recent development, the Goods and Services Tax (GST) council has announced a 28 percent tax on online gaming, casinos, and horse racing. This decision has raised concerns among industry stakeholders including investors, gaming companies, and others, who worry about the impact of this tax on businesses, industry jobs, and foreign investment. Consequently, more than 45 video game companies in India have jointly written a letter to the Prime Minister’s Office, the Ministry of Electronics and Information Technology, and the Ministry of Information and Broadcasting. The purpose of this letter is to address the ambiguity surrounding ‘online gaming’ and establish a clear distinction between video games and real money gaming/fantasy sports.
The signatories of this letter include prominent Indian video game companies such as SuperGaming, Outlier Games, and GameEon Studios. They have clarified that the recent 28 percent GST on online gaming does not affect video games. According to them, the Indian Video Games Industry, valued at $812 million as of 2022, continues to be taxed at 18 percent and is supported by the Indian government through the planned AVGC-XR Policy. The consortium of game companies emphasizes the need for a distinct recognition of the games industry in India and urges the government to avoid categorizing video games and e-sports in the same bracket as real money gaming and online fantasy sports.
The letter highlights the misinformation campaigns linking video games with real money gaming/fantasy sports, stating that these campaigns are based on an erroneous assumption. The use of the broad term ‘Online Games’ leads to confusion and controversies, ultimately fueling the debate surrounding the imposition of 28 percent GST. The game companies propose categorizing games that involve wagering real money as ‘iGaming’ to align with global standards. They stress the importance of clearly differentiating and categorizing Video Games as separate entities from Real Money Games and Fantasy Sports to support the industry’s growth and economic contributions.
The letter also sheds light on the global revenue generated by the games market, which does not include revenue from Real Money Games and Fantasy Sports. By association, the Indian video games industry has been subject to unfair social stigma and clouded investor perception. The game companies argue that gamers are well aware of the differences between Real Money Gaming, Fantasy Sports, and video games, and the rules should reflect these differences to ensure best practices and protections for the vast number of gamers in India, estimated to be over 500 million.
It is important to note that video games themselves are not subject to the new taxation policy. However, fantasy cricket apps and other similar fantasy and real-money games will be subject to 28 percent GST. Concerns have been raised about addiction and the potential financial harm associated with real money wagering on these apps. Additionally, investors like Tiger Global and Peak XV, who have invested in fantasy sports companies, argue that the ‘online games’ tax will hinder foreign investment and put the $2.5 billion already invested in the sector at risk.
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Eugen Boglaru is an AI aficionado covering the fascinating and rapidly advancing field of Artificial Intelligence. From machine learning breakthroughs to ethical considerations, Eugen provides readers with a deep dive into the world of AI, demystifying complex concepts and exploring the transformative impact of intelligent technologies.
