Online gaming firms Nazara, MPL, Winzo, others seek review of 28% GST in open letter to government
July 15, 2023
This week, besides the heavy rains that lashed large parts of India, the country’s online gaming sector was struck by lightning when the GST Council hit it with a 28% indirect tax on the full value of what users pay. This led to much thunder and fuming in the industry as few were expecting this.
“We have been waiting for the GST Council’s decision for almost three years so that there is some clarity on taxation, but this is a shocker,” a founder of an online gaming unicorn said.
To understand the trauma, we’ll have to delve a little deeper into how online gaming companies, especially those involving real money, classify their revenues.
When a user wants to play a game like a fantasy sports competition or card games like rummy or poker, where they stand to win real money based on the outcome, they first deposit a contest entry amount (CEA). From this, prior to creating a pool that will be passed on to the winner, the platform deducts its fee — typically between 8-15%. This is called the gross gaming revenue (GGR).
Read More At : https://economictimes.indiatimes.com/tech/newsletters/ettech-unwrapped/online-gamings-tax-troubles-and-other-top-startup-tech-stories-this-week/articleshow/101770415.cms