Indian homegrown gaming companies intent on making the most of the ban on PUBG with their substitute offerings need to be cognizant of whether their offerings don’t fall under the ambit of gambling, which will result in them becoming taxable.

“Games such as HitWicket, World Cricket Championship (WCC) or mythology-based games such as Raji are expected to take advantage of this opportunity and there’s a need for the government to recognise and promote such segments in India,” said Lokesh Suji, director, Esports Federation of India.

With India in the top 5 mobile gaming markets globally & with Covid-19 showing no signs yet of going away, the ongoing trend of an increasing number of people engaging in online gaming & rise in time spent playing games is only expected to grow.

For those unaware, Online gaming has 3 chief sub-segments including real money games (RMG), mobile-centric/casual games & e-sports. The RMG genre further comprises rummy, poker, daily fantasy sports & quizzing.

Nonetheless, developers have to be vigilant of the Public Gambling Act, 1867, which has been adopted by many states. Even though skill-based games do not fall under the ambit of gambling, analysts believe that these games are open to different interpretations under the rules.

“Gaming companies should be careful regarding whether their model could be considered gambling or not. The rate of GST could change from 18 per cent to 28 per cent if it is gambling,” Meyyappan Nagappan, leader, digital tax, Nishith Desai Associate, said.

“Other tax issues that can come up in real cash games is that tax authorities typically claim that GST has to be paid on the whole cash amount and not just the service fee part. Some of these aspects are pending before courts and considering the huge impact on revenues this could have, companies should tread carefully and seek proper legal advice,” Meyyappan added.

“E-sports and other forms of real money skill gaming are different genres and one should not be confused with the other. Developers looking at innovating to bridge the void that PubG has left, should keep in mind compliance with content laws as well as intellectual property laws,” Ranjana Adhikari, co-head, Gaming, Nishith Desai Associates said.

“The ban on PUBG Mobile presents a great opportunity for indigenous homegrown game development studios to showcase their talent and create exciting game formats,” said Roland Landers, the CEO of All India Gaming Federation.

“We are confident that games like Rogue Heist, a multi-player online shooter game, designed and developed in India, will fill the need gap,” Landers said.

Source: Gaming360