Online gaming companies to lessen spend during ICC Men's Cricket World Cup amidst 28 percent GST
On July 11, the GST Council decided to impose 28 percent tax for online gaming. On August 2, Finance Minister Nirmala Sitharaman clarified that the 28 percent tax will take place from October 1.
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The online gaming industry is likely to lessen their spending in the ICC Men’s Cricket World Cup due to the 28 percent goods and services tax (GST) levy which is a threat to their financials.
On July 11, the GST Council decided to impose 28 percent tax for online gaming. On August 2, Finance Minister Nirmala Sitharaman clarified that the 28 percent tax will take place from October 1.
After these two announcements, there seemed to be a burden on egaming companies. Mobile Premier League announced 350 layoffs, Rush Gaming Universal let go of 55 people, Spartan poker fired 125 people and real money gaming platform Fantok suspended operations, as per reports.
Ashneer Grover, who was the co-foudner of BharatPe said that banning or targeting gaming has become a politically fashionable move, similar to restricting alcohol consumption. "Does it lead to lesser consumption? No, it doesn’t. Does it lead to revenue leakage for the government? Certainly, and it creates a parallel economy. The same applies to gaming. My belief is that gaming is not a vice; it has functioned well for the past decade and has the potential to generate significant employment and government revenue. However, the recent GST rule change has complicated matters."
Amol Dighe, chief executive officer of investments & business development at Madison Media, told Storyboard18 that the World Cup will drive growth in H2. Dighe said that online gaming, which faces higher GST, will be under stress to spend.
Rohit Agarwal, founder and chief executive officer, Alpha Zegus “So, we are actually starting to see the budgets slightly recover because we are inching closer towards the festive season. Before that, for at least 4 months - 5 months, it was a very dry period, because the recession had a very indirect effect on the industry."
As per Agarwal, in the influencer space, the imposition of 28 percent GST is less of a concern than recession, which is a greater concern.
Gaming consultant Navneeth Srinivas Garre has a different view than Agarwal. He says, "The imposition of 28 percent GST is going to affect companies whose repercussions will be experienced by the influencers. This will impact the marketing strategies and revenues."
