Game industry investors said the GST Council’s decision has caused shock and dismay
New Delhi:
The GST Council’s decision to levy a 28 percent tax on the real money online gaming industry will lead to a write-down of USD 2.5 billion in investment in the segment, a group of 30 Indian and foreign investors said in a joint letter to Prime Minister Narendra Modi.
In a letter dated July 21, leading investors including Peak XV Capital, Tiger Global, DST Global, Bennett, Coleman & Company Limited, Alpha Wave Global, Chrys Capital, Lumikai, etc.
“The current GST proposal will establish the harshest tax regime for the gambling industry worldwide, leading to a potential write-off of $2.5 billion of capital invested in this industry,” the letter said.
Investors said the GST Council’s decision has caused shock and dismay and will significantly and meaningfully erode investor confidence in the support of this or any sunrise sector in India’s tech ecosystem.
“This will also negatively impact future investment amounting to at least $4 billion over the next 3-4 years and hence the growth of the gaming sector in India,” the letter said.
Investors said if “full value of bets” is understood in a way where GST is levied on every match played every time with winnings fully taxed, the GST burden will increase by 1,100 percent.
Further, due to taxation of reclassified player winnings, the same money will be taxed repeatedly, resulting in a scenario where more than 50-70 percent of each rupee goes to GST, making the online real money skill gaming business model unviable, the letter said.
Investors said that levying 28 percent GST on gross gaming revenue (GGR) or platform fees will lead to a 55 percent increase in GST quantum, which would make it viable for Indian online gaming operators to survive and make a significant contribution to the Indian economy.
“However, in light of the GST Council’s decision, we humbly ask for your kind and urgent attention to this matter,” the letter read.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is being published from a syndicated feed.)
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