December 5, 2023
A group of more than 45 video game developers have approached the central government seeking a clear distinction between real money gaming, fantasy sports, and themselves from a policy perspective.

These developers – including Outlier Games, Dot9 Games, Lucid Labs, Newgen Gaming and SuperGaming — have flagged that recent campaigns by the real money gaming industry “project a homogenous image and suggest that the entire games industry of India is adversely affected” by the proposed 28% goods and service tax (GST) on online gaming.

On July 11, the GST Council agreed to impose a levy of 28% on the full face value for online gaming, but exempted those games that are played without stakes, which will be taxed at 18%.

“Globally, irrespective of skill or chance, a clear distinction is drawn between games involving wagering (categorised as ‘iGaming’) and games without wagering (categorised as ‘video games’). Unfortunately, in India, these mutually exclusive categories have been consolidated under the common umbrella of ‘online games’,” said the letter, sent to the Prime Minister’s Office, the ministry of electronics and information technology (MeitY), and the ministry of information and broadcasting (I&B). ET has reviewed a copy of the letter.

“…we wish to express our sincere appreciation to the GST Council, the Department of Revenue, and the Government of India for exempting Video Games from the recent 28% GST decision. Recognising that Video Games do not involve any form of wagering or staking, we are truly grateful for this thoughtful consideration, which acknowledges the diversity of business models within our industry,” the letter added.

In an interview with ET on July 14, revenue secretary Sanjay Malhotra had said that “online games, when played without stakes, continue to be taxed at 18%”.

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Notably, this is not the first time video game developers have sought a demarcation between them and real money gaming platforms. The issue was also raised following the notification of online gaming rules issued by MeitY in April.The real money gaming industry, which is expected to witness the impact of the GST Council’s decision, has said the move could drive users away to illegitimate gambling and betting platforms. In addition, investors in these companies have also argued that the decision could lead to a potential write-off of the $2.5 billion capital invested in the sector.

The development was first reported by news portal Moneycontrol.

Harish Chengaiah, founder and game director at Outlier Games, said, “Lots of dramatic statements were shared that claimed the doom and gloom of the Indian games industry. Let’s break this myth – the Indian video games industry is thriving, with a focus on innovative R&D-driven productions and plans to release two dozen video games based on original IPs (intellectual property) in the next five years, exporting Indian stories, character brands, and ethos globally.”

“It is important to understand that there is a difference between games such as Candy Crush, PUBG, etc and real money games (anything that involves any kind of wagering). This clear distinction should only help boost India’s already growing gaming industry,” Tarun Hinduja, founder & director, Firebolt Entertainment, said.

“The government of India has always frowned at gambling in any form and has now strengthened its stand by imposing a 28% GST on real money games,” he said.

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