Online gaming players in India dread that the industry might be seriously hit if the Center proposes a sweeping goods and services tax of 28% on it. As per Roland Landers, CEO of the All India Gaming Federation, this move could hamper the booming industry’s upward trajectory and lead to the closure of businesses in the sector.

Roland Landers added that the Indian online gaming industry needs a GST regime that can protect and promote the segment, which houses over 900 start-ups.

Furthermore, it is widely accepted that when a legitimate industry is taxed at unsustainable rates, its legitimacy is damaged. “Illegal players start operating, which is unsafe for users and also damaging to the country’s exchequer,” he said.

“A game is categorized as a skill-based game only when its success predominantly depends on the skill of the player,” Roland Landers added that this includes superior knowledge, training, attention, experience, and adroitness.

According to Business Standard, the GST Council is likely to consider imposing a flat 28% tax on online skill gaming.

The country’s gaming industry is right now assessed at 81.5 billion. Likewise, India is the second-biggest online gaming market on the planet, with a yearly growth rate of 38%. More than 300 million mobile users play online games in India. This is close to one-fourth of the nation’s population.

As per industry pioneers, the Indian gaming industry is the fastest developing segment in the $24-billion media and entertainment market.

An Invest India report said that the gaming industry can capture around 5% of the worldwide market in the animation, visual effects, gaming, and comics (AVGC) sector by 2025. It would have a 25-30% yearly development and over 160,000 new jobs every year.

The 2022 Budget had proposed setting up a promotional task force for the AVGC sector, calling it a dawning industry. The industry saw outstanding growth during the pandemic. It has been developing at a CAGR of 40% from 2019, as per a Deloitte India report.

Mobile gaming, specifically, saw monstrous development in the country, with 7.3 billion game installs in the initial 3 quarters of 2020. If this was not sufficient, investor capital is likewise fueling the development, with the industry contributing three unicorns to India. As indicated by Invest India, total funding for the sector contracted by $350 million between 2014 and 2020.

The online gaming sector is broadly divided into skill-based games and games of chance. Online skill-based games incorporate poker, rummy, fantasy sports gaming, and a large number of casual e-games. On the other hand, esports organizations are drawing in gaming lovers with tournaments at various levels. The contests offer amazing prize money to engage more players.

The Indian form of PUBG Mobile, Battleground Mobile, organized a pro series, which had a total prize pool of Rs 2 crore and saw 24 groups participating. The top group, SouL, won Rs 75 lakh in the grand finale.

A top player of a national-level tournament of Rogue Heist — a shooting battle game — in the Mobile Premier League can win an award of Rs 6.25 lakh.

Yash Pariani, founder and CEO of Esport start-up House of Gaming, said, “The government may put the same amount of taxes on chance-based games, which technically don’t require as much effort as Esports.” It requires years of practice to reach a certain level.”

He added, “The taxation will be harsh as it may restrict the booming esports industry in India.” Nevertheless, it is expected to grow exponentially in the years to come.

Credit: Business Standard