Online Games: The burden of 28 percent will come on the customers. But the companies will have to bear the brunt of this in the form of a decline in gaming volume.
GST On Online Games: The GST Council met under the chairmanship of Finance Minister Nirmala Sitharaman on July 11, 2023, and the Council, following the recommendations of the Group of Ministers, decided to impose 28 percent GST on online gaming, horse racing and casinos.
The GST Council has decided to levy GST on the full value. This rule will be applicable after amendment in GST law. But due to this decision of the GST Council, the difficulties of companies like gaming company Dream11 and MPL and their customers have increased.
The Finance Minister said that this decision has been taken after talking to the states and there will be no loss to the industry. Whereas this $1.5 gaming industry is calling this decision of the government wrong. He believes that the burden of 28 percent will fall on the customers.
But the companies will have to bear the brunt of this in the form of a decline in gaming volume. Due to 28 percent GST, job loss can be seen in the online gaming sector. Also, it will be difficult for Indian companies to compete with foreign companies. Due to high tax, people will refrain from playing online games.
Tiger Global invested giant gaming company Dream11 and MPL will have to bear the brunt of this. Dream11 is the biggest gaming firm to date, whose valuation is estimated to be around $8 billion.
Till now these companies had to pay tax only on the real money games which they were offering to the customers. But according to the new rule, 28% GST will have to be paid on the entire amount of payment made by the person playing the games.
If we look at the revenue of Dream11, the company’s revenue in 2022-22 was Rs 3841 crore. While the profit decreased by 56.6 percent to Rs 142 crore. Dream 11 has been sponsoring IPL for three years. Also, many cricket stars are the brand ambassadors of the company.
The government has decided to impose 28 percent GST on online gaming when a sharp jump in the revenue of the fantasy gaming platform is being seen. Especially during the Indian Premier League, there has been a huge increase in the revenue of gaming companies.
According to Redseer Consultancy, the revenue of the gaming industry reached Rs 2817 crore with an increase of 24 percent compared to a year ago. And a total of 61 million users played the game.
The decision of 28 percent GST on online gaming has shocked the industry which was showing rapid growth. At present, the online gaming sector is worth 10 billion dollars, which can increase to 25 billion dollars by 2025.
The online gaming industry has already suffered a setback due to the tax. But even for those who play online games, playing online games has become expensive.
