It’s been a few months since the new 28% GST rule was initiated for Online gaming companies in India. To be exact, four months after the GST implementation, gaming companies are now looking for ways to retain players by simply offsetting the taxes. In simple terms, if a person deposits an amount of Rs. 100, from that, Rs.28 gets deducted as GST, so the gaming companies are starting to return that 28% of the player’s money to them via vouchers, coupons and other ways.
The question here is how long online gaming companies can withstand this and survive in the market. Even though over four months have passed since the GST effects were implemented, companies are still looking for foolproof ways to retain their users and systems. Mentioning the fact that operating costs for these games have increased 4 to 5 times since the GST implementation. Now, all the business experts are trying to come up with a perfect business model to cope with the intricate challenge.
Aman Gupta, VP of finance at Witzeal Technologies, said that many companies have already started to shift their budgets through lay-offs, lowering market budgets, and adapting to other cost-cutting measures. Not only that, Witzeal Technologies is also looking for ways to innovate its system models in order to create a cutting-edge gaming experience and improve its user engagement.
According to reports, other online gaming companies have also started to offer incentives and cashback in order to offset the GST burden. Keeping the customers hooked to their gaming platforms as long as they can is a major goal for industry players right now, Manish Mishra suggested. Manish is a partner and a head of practice in indirect taxes at JSA Advocates and Solicitors, and he mentioned the financial changes companies are going through right now.
Official Statements On Recent GST Burdens On Gaming Companies
Kishore Kumar, a lead of the GST and Customs department at Taxmann Allied Services, said that online gaming companies are now open to the two strategic options for continuing their business. The two options are either absorbing the entire 28% of GST liability or passing the burden to customers. Now, companies can either manage their expenditures in order to get out of this crisis or continue to raise their operating prices.
Online gaming in India is an emerging sector, and it has a lot of potential to contribute to the growth of the Indian economy in the future, Anuraag Saxena said. He is the CEO of the industry body E-Gaming Federation (EGF). Adding to his statement, he also said that the online gaming industry and the government is trying to build a balance between them.
Companies like WinZo have announced their 25 million dollar investment plan in Brazil, where taxation is far lower than that of India. Brazil is the fourth largest gaming market worldwide. The tax levy that Brazil puts on their online gaming companies is 2 to 5%. The expansion move by WinZo was taken due to India’s gaming ecosystem posing a challenge of a 400% increase in the GST, as per the company co-founders Paavan Nanda and Saumya Singh Rathore. To simply put it, the main hurdle for online gaming companies in the country is to tackle this 400% tax increment effectively and in time.
Source: Financial Express
