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RIP - Real money gaming industry in India: Ashneer Grover; Slams 28% GST
The $1.5 billion online gaming industry has grown in popularity in recent years and has attracted foreign investment.
Businessman Ashneer Grover criticized the move by the Council for Goods and Services Tax (GST) to impose a 28 per cent tax on the turnover of online gaming companies. Grover even said the move would kill off the fantasy gaming industry, adding that it's time for startup founders to get into politics. Grover released his own fantasy game called Crickpe in April this year, which allowed users to create a virtual team of cricketers based on their current form. Players earn points based on the cricketer's performance in a real match.
"RIP - Real money gaming industry in India. If the govt is thinking people will put in ₹ 100 to play on ₹ 72 pot entry (28% Gross GST); and if they win ₹ 54 (after platform fees)- they will pay 30% TDS on that - for which they will get free swimming pool in their living room come to the first monsoon - not happening!" the BharatPe co-founder said in his tweet.
"It was good fun being part of the fantasy gaming industry - which stands murdered now. $10 Bn down the drain in this monsoon. Time for startups Founders to enter politics and be represented - or this will be spate industry after industry," he added.
The online gaming industry said the 28 per cent GST imposition would limit its ability to invest in new games and affect cash flows and business expansion. The All India Gaming Federation (AIGF), representing companies including Nazara, GamesKraft, Zupee and Winzo, called the council's decision "unconstitutional, irrational and egregious".
The $1.5 billion industry has grown in popularity in recent years and has attracted foreign investment. The gaming apps are backed by sports heroes in India, where cricket is a national passion, but concerns have grown over possible addiction and financial loss.
Dream11, which is the title sponsor of the India national cricket team and is valued at $8 billion, is backed by Tiger Global. Peax XV, formerly Sequoia Capital India, has invested in the MPL app. Union Finance Minister Nirmala Sitharaman said the decision to tax the total amounts collected by gambling companies was taken after consultation with states and was not intended to harm the industry.
