India online gaming firms warn of ‘Devastating’ tax hike impact
More than 125 companies from India’s nascent online gaming industry warned the government that the sector could face a massive loss of investments and jobs following a decision by the Goods and Services Tax Council to increase tax rates sharply.
More than 125 companies from India's nascent online gaming industry warned the government that the sector could face a massive loss of investments and jobs following a decision by the Goods and Services Tax Council to increase tax rates sharply.
Earlier this week, the council imposed a levy of 28% at entry points on full face value for online gaming. It's a blow to an industry which caters to over 420 million Indians, a customer base bigger than the population of the US.
Stocks of gaming firms such as Nazara Technologies Ltd. and Delta Corp Ltd. declined following the move.
“This would potentially have devastating implications” including the shutdown of businesses for startups and small- and medium-sized enterprises, according to a letter signed by 127 Indian companies including Nazara Tech.
They said the 28% levy rate should be on platform fees charged by companies to users instead of the full deposit value, which “poses a significant threat to the industry's continuity”.
India's online skill gaming industry has an enterprise value of $20 billion, after having raised over $1.5 billion between January 2021 and June 2022, according to the letter. The industry claims to employ around 100,000 people with revenues of $2.5 billion, forecast to double by 2025.