Indian tech entrepreneur and co-founder of BharatPe, Ashneer Grover, has expressed his dismay over the government’s decision to impose a 28% Goods and Services Tax (GST) on online games. He believes that this high tax rate will have a detrimental impact on India’s thriving gaming sector, and has raised concerns about the future of the industry. In a tweet, Grover suggests that startup founders should enter politics to have their voices heard and advocate for a more favourable tax environment for the gaming industry.
Grover, who is also the founder of Crickpe, a fantasy cricket mobile game, is particularly concerned about the impact of the GST on his startup and its users. Crickpe allows players to participate in paid leagues and win cash prizes. However, with the new tax rate, Grover argues that the financial burden on players will be significant. He highlights the scenario where players enter a contest with a certain amount, but after deducting platform fees and being taxed on their winnings, they are left with a much smaller amount. Grover warns that this tax hike could lead to the demise of the real money gaming industry in India and result in significant financial losses for startups and players alike.
Ashneer Grover’s criticism is not isolated. The All India Gaming Federation, the E-Gaming Federation, and the Federation of Indian Fantasy Sports (FIFS) have also voiced their concerns about the increased tax rate. They emphasise that the proposed tax structure, which includes taxing the total pool rather than the Gross Gaming Revenue (GGR), would be devastating for the online skill gaming industry in India. Roland Lander, CEO of the All India Gaming Federation, warns that the combination of higher tax rates and taxing the entire contest entry amount could have a catastrophic impact on the industry, hindering its growth and potential.
The decision to impose a 28% GST on online games has sparked a broader discussion about the need for a more favorable tax environment to support the growth of the gaming sector in India. Industry players, entrepreneurs, and associations are calling for a reconsideration of the tax rate and a focus on creating an enabling environment that encourages innovation and investment in the gaming industry.
It remains to be seen how the government will respond to these concerns and whether any changes will be made to the tax structure. The outcome will have significant implications for the future of the gaming industry in India and the ability of startups to thrive in this sector.
