Impact of Tax Increase on India’s Online Gaming Companies Could be Severe
Over 125 companies in India’s emerging online gaming industry have cautioned the government about the potential consequences of a significant increase in tax rates by the Goods and Services Tax Council. They fear that this decision could lead to substantial losses in investments and job opportunities within the sector.
Earlier this week, the council imposed a 28 percent levy on the full face value of online gambling. It’s a blow to an industry that serves more than 420 million Indians, a customer base larger than the population of the United States.
Shares of gaming companies such as Nazara Technologies Ltd and Delta Corp Ltd fell after the move.
According to the letter signed by 127 Indian companies, including Nazara Tech, “This would have potentially disastrous consequences,” including business closures for startups and SMEs.
They said the 28% payout rate should be based on the platform fees companies charge users, rather than the full value of the deposit, which “is a significant threat to the continuity of the industry”.
India’s online skill gaming industry is valued at $20 billion after raising more than $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 and is projected to double by 2025.
