Ashneer Grover, the co-founder of BharatPe and former judge of the reality show Shark Tank India, on Wednesday said it was good fun being part of the fantasy gaming industry, “which stands murdered now”. It was with reference to the GST Council’s decision on Tuesday to levy 28 per cent tax on online gaming.
“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 is going to be spate industry after industry,” Ashneer Grover said in a tweet on Wednesday.
He added that if the government is thinking people will put in Rs 100 to play on Rs 72 pot entry (28 per cent gross GST); and if they win Rs 54 (after platform fees) — they will pay 30 per cent TDS on that — for which they will get free swimming pool in their living room come the first monsoon – not happening!
Stating that “India is Super Fun! Super Ironic,” Grover in another tweet said uncles sipping on their drinks, smoke in hand, bragging about how they made their fortunes in land speculation – by putting their cash to good use, planning their next Casino trip to Macau and passing judgement on online gaming and how its spoiling the youth.
“Would love to see Govt introduce 28 per cent GST and 20 per cent TCS on land purchases,” he added.
The GST Council in its 50th meeting on Tuesday decided to impose a 28 per cent tax on online gaming, horse racing and casino. “Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of Horse Racing and on the full value of the bets placed in case of the Online Gaming,” the finance ministry said in a statement.
Industry players say the move is detrimental for the online gaming industry.
Soham Thacker, founder CEO of Gamerji, said, “There is definitely going to be an impact at multiple levels — User base, revenues and investor sentiment — both for RMG (real money gaming) and non-RMG as no distinction has been made.”
He added that for non-RMG companies like ours, we expect a slight impact on the subscription-driven revenues. Currently, on our platform, we levy 18 per cent GST on the total subscription cost which now goes to 28 per cent making it more expensive for the users to get on the platform.
“So, in the short run, it is likely that some companies will absorb this impact to a large extent thus taking a hit on their revenues or they may consider increasing the subscription cost. Many gaming companies in order to limit the impact on the investors side, may choose to relocate their business outside India making this geography their secondary market. Over the last 5 years, the gaming industry has been booming in India, but this move is likely to slow down the growth as the impact on RMG companies is more severe,” Thacker said.
Up until now, 18 per cent GST was applicable only on the gaming fee which was paid by the companies but the 28 per cent is now applicable on the entire pool of money which is going to impact the winnings and thus the user journey. Already, there is 30 per cent TDS applicable on the winnings. “So net to net, for RMG, this move will have a setback on their business and user base.”
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