Online gaming firms Nazara, MPL, Winzo, others seek review of 28% GST in open letter to government

Synopsis The letter, a copy of which has been reviewed by ET, was signed by companies, including Nazara Technologies, Mobile Premier League (MPL) and its game development unit Mayhem Studios, Gameskraft Technologies, and WinZO Games. ETtech In the open letter, the companies said the online skill gaming sector in India has a $20-billion enterprise valuation and generates annual revenue of $2. 5 billion.

The industry is expected to grow at a 30% compounded annual growth rate to reach annual revenue of $5 billion by 2025, they said. Around 130 online gaming companies and industry associations, including Mobile Premier League (MPL), Nazara Technologies , Gameskraft Technologies and Winzo Games, have jointly appealed for reconsideration of the GST Council’s recommendation to impose 28% tax on the full face value of online gaming . They have signed an open letter urging a “viable and progressive GST regime.

” Also read | Online gaming’s tax troubles “The proposal to charge GST on full deposit value will reverse the growth trajectory of the industry. This would potentially have devastating implications (including shutdown of businesses) for MSMEs (micro, small and medium enterprises) and startups that may not have the capital reserves to withstand such a sharp tax increase,” said the letter. The letter, a copy of which has been seen by ET, was also signed by industry bodies such as the All India Gaming Federation (AIGF), E-Gaming Federation (EGF), Federation of Indian Fantasy Sports (FIFS) and All India Game Developer’s Forum.

While the AIGF represents companies such as MPL, Zupee and Paytm First Games, EGF represents the likes of Games 24×7 and Junglee Games. FIFS is backed by platforms such as Dream11 and Fantasy Akhada, in addition to a dozen other fantasy sports operators. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories ‘$2.

5 billion investment at stake’ The government had earlier dismissed the need for any consultations with the industry on the matter, saying it was a “unanimous” decision and that an early review was unlikely. Revenue secretary Sanjay Malhotra had said 28% GST on the entire transaction value for online gaming had always been in effect, and that companies had been “interpreting” the rate as 18%. Tuesday’s announcement was only a clarification, he had said.

Also read | GST tweak may cost 40 online gaming companies Rs 10,000 crore In an interview with ET on Friday , Malhotra also alluded to there being a moral and social dimension to GST Council’s decision on tax for online gaming. “The investment has to follow the needs of the society, the government, the public,” he had said, when asked about the industry’s view that the decision could impact investments. The letter’s signatories also said the imposition of GST on full value would “debilitate potential investors, both domestic and foreign, from considering the online gaming sector as a viable investment destination.

” The industry expressed concern over the impact of the levy on the domestic startup ecosystem as a whole, and not only on attracting fresh capital to gaming. “The majority of these financial institutions invest across sectors, and a favourable regulatory landscape is one of the single most important drivers for FDI (foreign direct investment),” they said. “In addition, the current $2.

5 billion-plus in investments is at stake, basis this decision. ” Also read | Online gaming companies seek more clarity on GST ET on Saturday reported that online gaming companies were in a huddle over their next steps, and were expected to seek clarifications from the government on applicability of the GST, such as whether the tax will be levied if a user enters a new contest with the winnings of a previous one. In the open letter, the companies said the online skill gaming sector in India has a $20-billion enterprise valuation and generates annual revenue of $2.

5 billion. The industry is expected to grow at a 30% compounded annual growth rate to reach annual revenue of $5 billion by 2025, they said. Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp.

click here! Saturday, 15 Jul, 2023 Experience Your Economic Times Newspaper, The Digital Way! Read Complete Print Edition » Front Page Pure Politics Companies Brands & Companies More Fuelled by Foreign Money, D-St Indices Head for Stratosphere Indian shares extended their record-breaking run on Friday with the Sensex closing above 66,000 and the Nifty breaking past 19,500 for the first time after US inflation in June rose at the slowest pace in more than two years, fuelling bets the Federal Reserve may be close to ending its rate-hiking cycle. Online Gaming Cos Seek More Clarity on GST Online gaming companies, which have slammed the Goods and Services Tax (GST) Council’s decision to impose the maximum 28% indirect tax on the full face value of the business, said they are awaiting details on the applicability of the levy before deciding their next steps. Cos Planning IPOs told to Drop Director Nomination Rights The Securities and Exchange Board of India (Sebi) is asking companies planning initial public offers (IPOs) to remove director nomination rights provided to promoters and investor shareholders from the articles of association.

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