Indian Video Games Industry Responds to 28 Percent GST Controversy for "Online Games"

The recent decision to apply 28 percent Goods and Services Tax (GST) on “Online Games” the Indian Government has sparked extensive discussions and triggered targeted PR campaigns. These campaigns associate Real Money Games (RMG) and Fantasy Sports with Video Games and Esports, both in front of domestic and international media as well as gamers. These campaigns project a homogenous image and suggest that the entire games industry of India is adversely affected by the Government’s imposition of 28 percent GST.

The Indian Video Games industry has written to the PMO, MeitY, and I&B Ministry asking for a clearer distinction between Video Games, and RMG/Fantasy Sports; RMG/Fantasy should be called ‘iGaming’ the way it is defined in the rest of the world. The letter, along with its signatories, has been attached to this press release. Important details are as follows.

1. The government’s decision applies only to Real Money Games and Fantasy Sports, as it involves “users staking money for winning cash rewards based on the outcome of the game.” Video games do not have a staking/wagering element and are thus excluded from the 28 percent GST bracket.

2. Indian Video Games Industry (valued at $812 million as of 2022) is unaffected by the recent developments on the GST as these sectors continue to be taxed at 18 percent and supported by the Indian government through the planned AVGC-XR Policy.

These lapses have raised significant concerns within the Indian Video Games Industry. This is why we think it is necessary to release this statement to provide clarity regarding the prevailing situation.

Clearer Distinction Between Video Games and Real Money Games/Fantasy Sports Necessary

“Online Games” is too broad of a term and carries a different meaning in Indian jurisprudence compared to the global understanding, leading to confusion among gamers, international investors, game publishers, and media during the GST row. This confusion has played a considerable part in fuelling the recent controversy on 28 percent GST. What is being called “Online Games/Online Gaming” in India is known as ‘iGaming’ internationally. It’s also pertinent to highlight that the global games market revenue of $184 Billion does not include revenue from RMGs and Fantasy Sports.

Harish Chengaiah, Founder and Game Director at Outlier Games:

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 in the next five years, exporting Indian stories, character brands, and ethos globally.

We are actively contributing to government initiatives such as ‘Create in India’, ‘Brand India’, and ‘1 Trillion Digital Economy’. Moreover, we are attracting notable strategic foreign direct investment and mentorship programs like the ‘India Hero Project’ from Sony Interactive Entertainment and unparalleled support from the government in the form of the AVGC-XR Policy. Indian video games industry is a sunrise sector today but in 3-5 years it is undoubtedly going to be a sunshine sector

Roby John, Co-Founder, and CEO at SuperGaming:

Gamers know the difference between Real Money Gaming, Fantasy Sports, and video games. The rules should evolve to reflect these differences as well. This would ensure the best practices — and more importantly — protections for India’s 500 million plus gamers.

Nikhil Malankar, Founder & CEO at GameEon Studios:

India possesses immense potential in the gaming space, with a strong presence in mobile, PC, and console gaming. Despite recent concerns surrounding the 28 percent GST, it is important to note that the overall gaming industry remains resilient and unaffected. Moreover, it is crucial to dispel the misconception that this tax applies to non-Real Money Games and non-betting games. Such a misrepresentation and distortion of facts from reality undermine the vibrant gaming ecosystem that continues to thrive in India.

Biprajyoti Chakraborty, Co-Founder at DIOSC Gaming:

In a country like India where video gamers are still very young and new, it is really important for the government to clarify the necessary laws and rules associated with it to create a sustainable environment for the industry to thrive. Misinformation and unclear rules & regulations can lead to the destruction of the Indian gaming industry which has the potential of becoming the industry leader in game production.

Mayur Bhimjiyani, Co-founder and CEO at Hypernova Interactive:

Video Games are a cultural phenomenon with stories. They are about shared moments of joy with friends and family. They are about music and entertainment! Think of them as movies. You buy a ticket. You watch a movie. You enjoy yourself. You don’t expect to make a profit. Real Money Games are more transactional in nature, they are about “Bet X to Win Y”. The GoI has been very consultative with the video game industry and has given a clear definition of such Real Money Games and defined them as

“Online Games”. And these “Online games” are the ones that have been impacted by the 28 percent GST announcement. Not Video Games.

Anurag Khurana, CEO and founder of Penta Esports:

While the revised GST of 28 percent will be levied on “Online Games”, it certainly does not apply to esports. It should be made clear that the 28 percent GST is for games which involve staking/wagering of money. Esports inherently does not involve any form of the staking/wagering elements and hence has no impact.

Jemish Lakhani, Founder & CEO, XSQUADS Tech:

The Indian video game industry is becoming self-reliant (Aatmanirbhar), but a 28 percent GST on all game types could stall its growth. We must differentiate between Real Money Games and Video Games to avoid negative impacts. By fostering a favourable tax structure, we can unlock the Video Game industry’s economic potential, boost India’s position in the global gaming market, and secure billions in future revenue for the country.

Tarun Hinduja, Founder & Director, Firebolt Entertainment:

With every new law, comes some amount of misinterpretation. The GoI has always frowned at gambling in any form and has now strengthened its stand by imposing a 28 percent GST on Real Money Games. 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 the already growing gaming industry in India.

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