A group of 30 Indian and foreign investors have written a joint letter to the Prime Minister Narendra Modi Expressing concern over the proposed imposition of 28% GST on online gaming. In a letter dated July 21, lead investors including Peak XV Capital, Tiger Global, DST Global, Bennett, Coleman & Co Ltd, Alpha Wave Global, Kris Capital, Lumikai etc have sought PM’s intervention in the GST Council’s decision. investors said GST CouncilThe decision has caused shock and dismay and will substantially and meaningfully undermine investor confidence in supporting this or any other emerging sector in the Indian tech ecosystem.
key points in the letter
“The current GST proposal will set up one of the harshest tax regimes for the gaming sector globally, potentially writing off $2.5 billion of capital invested in the sector,” the letter said. It added, “This will adversely impact the potential investment of at least USD 4 billion over the next 3-4 years and hence the growth of the gaming sector in India.” “…in the light of the decision of the GST Council, we humbly request your immediate attention to the matter,” the letter said, while appealing to the Prime Minister for his immediate attention.
Tax burden will increase up to 1100%
Calculating, the investors said that if the “full value of the bet” is understood in such a way that GST is levied on every contest played with fully taxed winnings, the GST burden would increase by 1,100 per cent.
Moreover, due to the taxation of the reinvested player’s winnings, the same money will be taxed repeatedly, resulting in a situation where more than 50-70 per cent of each rupee will go to GST, the letter said. , making the online real money skill gaming business model unviable.
Investors said that the imposition of 28 percent GST on gross gaming revenue (GGR) or platform fee would increase the GST volume by 55 percent, making it possible for Indian online gaming operators to survive and become a significant contributor to the Indian gaming industry. economy.
key points in the letter
“The current GST proposal will set up one of the harshest tax regimes for the gaming sector globally, potentially writing off $2.5 billion of capital invested in the sector,” the letter said. It added, “This will adversely impact the potential investment of at least USD 4 billion over the next 3-4 years and hence the growth of the gaming sector in India.” “…in the light of the decision of the GST Council, we humbly request your immediate attention to the matter,” the letter said, while appealing to the Prime Minister for his immediate attention.
Tax burden will increase up to 1100%
Calculating, the investors said that if the “full value of the bet” is understood in such a way that GST is levied on every contest played with fully taxed winnings, the GST burden would increase by 1,100 per cent.
Moreover, due to the taxation of the reinvested player’s winnings, the same money will be taxed repeatedly, resulting in a situation where more than 50-70 per cent of each rupee will go to GST, the letter said. , making the online real money skill gaming business model unviable.
Investors said that the imposition of 28 percent GST on gross gaming revenue (GGR) or platform fee would increase the GST volume by 55 percent, making it possible for Indian online gaming operators to survive and become a significant contributor to the Indian gaming industry. economy.