GroovyPotato

Thoughts on 28% GST for online gaming?

Folks at Dream 11, Games24×7, Junglee, etc how's the environment in the office? Have there been any updates from the leadership regarding the direction they'd be taking? As of now, here at Gameskraft it's an elephant in the room with everybody in denial, talking about how we can still survive and no updates from leadership yet.

20mo ago

BubblyDonut

Dream 1120mo

I’m from a esports gaming company. Spoke to my CEO regarding this today morning.

This move is completely short sighted and reinforces how bad policymakers are in our country. This might kill small companies in the short/medium term altogether.

Gaming companies based out of India that were looking to raise funding will have the hardest time doing so going forward. 28% GST + income tax on the company end. ₹100 deposited directly being reduced ₹72 in your account. The government ends up earning almost 50% from players AND the company.

I’m seeing boomers applaud this move as they want the new generation to “focus more on less time wasting activities”, but they don’t know anything about the numbers of the gaming industry outside of India. Indian esports and gaming is just at the beginning of its rise. This move sets it back in terms of investment and revenue heavily.

Luckily, we’ll have an entity setup in the UAE soon, and that entity will in a few months become the holding entity, with the Indian entity being a subsidiary. Many more companies will do this, and the government will see how this increase in taxes backfires because companies will just create holding entities outside of India :)

GoofyDonut

Stealth20mo

Holding companies will save the company taxes, but will it have any impact on the payout received by the users?

BubblyDonut

Dream 1120mo

That won’t matter to companies. In the end what matters to D11, MPL, or any other company is the revenue they make. They’ll end up paying 5-10% taxes in other countries.

As for the user, the ₹100 deposited will stay ₹100, won’t be ₹72 by default. And they’ll have to only pay the GST on winnings. A majority of people won’t mind that as long as they’re getting their monies worth.

QuirkyPotato

Stealth20mo

@StrawhatSasuke what are you smoking I want some.

Moving your business to Dubai changes nothing. You think Nestle can ignore GST and corperate tax in India because it's a Swiss company?

A subsidiary will be collecting revenue and making deposits to Indian consumers. Gov has domestic consumers and companies by the balls, no way around it.

Furthermore, 28% of winnings tax was always there. What is new is the proposal to tax whole friggin cash pot. And not just one time on cash deposit. Every. Friggin. Pot. ABSOLUTELY INSANE.

Most RMG companies operate at 10% ebita. This margin will be decimated. Everyone except D11 is done.

BubblyDonut

Dream 1120mo

I’m just telling you the conv I had with my boss. This doesn’t affect us much in the long term because our holding company will change. We will still pay GST here but from the subsidiary that won’t be earning much in india anyways

QuirkyPotato

Stealth20mo

Sure, If you are not earning from Indian consumers this will have very little effect on you.

An Indian account, attached to an Indian company would be needed to collect revenue from any local payment gateways gambling apps use. So a subsidiary would pay corperate tax on the profit.

Doing anything else would carry too much risk of jail time.

SwirlyPretzel

Stealth20mo

Do you guys suppose this argument can be extended to trading too? It’s also real money gaming in some sense. 🤐🤐🤐😅😅

GroovyPotato

Zomato20mo

1% of day traders make money Public: Trade at your own risk 5% RMG players make money Public: This is literally the sole cause of society's downfall

SwirlyPretzel

Stealth20mo

Incorrect stat - 11% people make money in trading. So that way it’s definitely better than RMG if RMG is at 5%.

It’s highly regulated with strict controls on KYC, anti-money laundering etc. And trading provides liquidity, makes price discovery better and also allows people to hedge. :) yes people also call it gambling. What to say!

FluffyBagel

Freelancer20mo

stop calling any of this gaming ffs. online casino, that's all it is.

SqueakyNugget

Flipkart20mo

It’s applicable on buying skins inside games as well. That’s not gambling

DizzyMochi

Stealth20mo

no it’s on gains only

FuzzyMarshmallow

Stealth20mo

Did someone check with Ashneer?

SqueakyNugget

Flipkart20mo

Looks like next company will be third unicorn now .

DancingQuokka

Stealth20mo

I think it is a sin tax which the Govt has applied. Gaming is today what smoking was some time back (~30 years ago).

Today only heavy gamers will stick but in coming years, given the trend in the new generation and given the rise in nuclear families, no one can deny the importance the gaming industry will play.

So as we see today, govt taxes and subsequently high cost of smoke sticks don't put enough deterrent for heavy users. It'll be a similar thing here as well.

Although the ticket size is different for these 2 but a parallel can be drawn crudely.