With the emerging technologies, the gaming industry is anticipated to open new dimensions for players and platforms offering games opening numerous avenues for employment opportunities. The Indian online gaming sector is soaring exponentially and is currently valued at $1.8 billion and is expected to reach $4-5 billion by 2025 according to the EY – AIGF report. Moreover, online gamers in India are estimated to grow from 360 million in 2020 to 510 million in 2022. There are over 400 gaming start-ups at present that are accelerating the growth of the sector.
A game of chance attracts a higher GST rate of tax in comparison to a game of skill. Online games operate either on the ‘rake fee’ model wherein the gaming platform charges a rake fee for facilitating games or ‘freemium’ models wherein the gameplay is free but additional features may require users to purchase specific items for a monetary price. A rational imposition of Goods and Services Tax (GST) is therefore vital for sustainability of this industry.
The Union budget of 2022 will be presented on tomorrow, 1 February, and the industry expects that the government will lay more focus on this sector. For the 2022 Union Budget the gaming industry stalwarts are expecting the government to roll out dedicated policies, schemes and so on for RMG online games, esports and gaming to strengthen the sector.
All India Gaming Federation CEO Roland Landers said, “The online gaming industry is growing at an impressive CAGR of 25 to 30 per cent and holds significant potential for overall economic growth, job creation and contribution to the government’s vision of a trillion-dollar digital economy by 2025. To enable the industry in realising its peak growth potential, it is imperative that the GST regime for the online gaming industry is kept rational and at par with other technology platforms and services. It is important to highlight that regressive taxation of these emerging sectors may only make the business unsustainable in India. Our recommendation is that the tax authorities should align its policies with internationally accepted principles of taxing the online gaming sector and provide certainty to the industry.”
Talking about crystallising the GST levy mechanism, Landers further added, “The valuation mechanism in levying GST should be clearly outlined to avoid any ambiguities and potential litigations leading to tax demands as the same will adversely impacts the business plans, operations, and entry of new players in the industry.”
POKKT co-founder and COO Vaibhav Odhekar shared, “In the Union Budget 2022, we hope that the government will introduce measures to support the next phase of growth in the gaming sector. The budget should consider creating separate zones for the gaming industry with subsidies on employment and tax waivers for three years. Apart from that, Cloud Server companies should come under a lower rate of GST. There has been increased interest from foreign investors in the gaming sector, and hence, allowing higher FDI can further drive economic growth. We also propose that online gaming can be legalized with certain riders to eliminate their adverse effects. Further, online betting should be legalized while keeping it under the highest tax slab. Lastly, we hope for a uniform policy and more clarity in the regulatory system, providing much-needed stability to the gaming sector.”
Games24x7 co-founder and co-CEO Bhavin Pandya said, “Online gaming is a sunrise sector with immense investment, employment, and revenue potential. The rise of the gaming sector also benefits the growth of other sectors that are the focus of the government including semiconductor, fintech, telecom and IoT.
Gaming has the potential to transform the way new India is learning. Gamification is increasingly used to improve education, training, and skill development. Established players in the online gaming sphere have the wherewithal to support a variety of professions from budding entrepreneurs to established technologists and data scientists which will further accelerate growth and make India an exporter of gaming content and IPs.
The sector eagerly awaits progressive policy structure from the government as well as fair treatment from the GST council. With proper support, the online gaming sector can give a big impetus to the government’s drive to create a one trillion dollar digital economy.”
Witzeal Technologies CEO and founder Ankur Singh said, “The Indian gaming industry is one of the fastest-growing industries in India from a new age technology perspective currently. As per the report launched by the EY- AIGF in 2021, online gamers are estimated to grow from 360 million in 2020 to 510 million by 2022. Moreover, the initiative of the Government of India that promotes internet access to citizens at affordable rates and smartphone penetration has been a game-changer for this industry. Now we are expecting that, in realizing its full potential for growth in upcoming years, the government’s focus on this sunrise sector will further help in keeping with the government’s objective of generating unicorn start-ups and act as a catalyst to contribute immensely to the five trillion economy target by 2024-25. Besides this, PM Narendra Modi’s announcement of declaring a start-up day (on 16 January) has been an extremely encouraging move further pushing the Digital India initiative by the central government of India. Taking inspiration from this growth in the upcoming budget we expect foresighted policies which would intensively nurture the new age technologies including gaming technologies that are sustainable for the future growth of the economy of the country and to attract international investors to invest in the Indian market in the upcoming years. It will also help in expanding businesses in other countries as well as generation of increased revenue to the exchequer of India”
Pocket Aces CFO Kunal Lakhara mentioned, “The government has done well with the Atma Nirbhay Package to support the various industries, largely MSMSEs. The M&E industry continues to provide large scale employment opportunities and the industry continues to grow with the growth being led by digital entertainment companies, including OTT platforms, content creators, VFX and post production. The M&E industry is fast evolving and with the advent of 5G – there will be a further spike in demand in how we consume content, play online games etc. The government should look to simplify rules relating to adoption of NFTs, Cryptocurrency, Blockchain etc. With progressive initiatives such as Digital India, we hope that in the current budget the government will extend export linked incentives especially to MSMEs and provide impetus to implementing uniform and simplified tax compliance (both direct tax and GST). On personal taxes – The government should look to simplify tax rules around exercise of ESOPs and provide tax benefits to salaried employees.”
World Esports Cup director Vishwalok Nath shared, “We hope the 2022 budget will take steps to not only empower the gaming industry but also offer an incentive for the esports ecosystem in the country. This would help bolster technological integration and investment in the infrastructure to create new possibilities for youngsters in the esports and video game sectors. The government should also encourage and back homegrown game developers, tournament organisers, and esports companies with steps like relief on the taxation to promote industry growth.”
Trinity Gaming co-founder and CEO Abhishek Aggarwal commented, “As the gaming industry has been flourishing, we are hoping the Government this time would take notice to offer some more support and protect the interests of this sunrise industry. We definitely depend a lot on direct investments and these investors play a crucial role. We hope they can suggest minimum taxation costs for this segment to attract more investors. It would be a favourable step to support the gaming community as well, as they seek various brand collaborations. Secondly, if 5G services could be made more accessible and pocket-friendly, that would be greatly appreciated.
We are also curious if the Government plans to bring in any new regulations. I hope even if it does, it ensures the result would not put any pressure on the community, which is still young but professional, and is still thriving, to grow. We trust our government and hope that any announcement on the gaming industry works in favour of all.”
Esports Federation of India director and of the Asian Esports Federation (AESF) vice president Lokesh Suji shared, “The year 2021, has been the inflection point for video games in India. As such, 2022 will usher higher inclination by brands into the gaming industry to target the young age group of gamers.
We are hoping the budget will be in favour of the video games industry, tax benefits should be given to the gaming cafes where aspiring gamers kick start their career. Mostly the types of equipment that are used by our esports athletes are imported or otherwise have high duties, so a tax redemption will be a good step to take gaming to the next level. The prize pools winnings of our esports athlete should be exempted from Income tax just like any other sportsperson.”
game.tv principal engineer Sohil Arora shared, “Esports is a relatively new phenomenon in India, yet it is rapidly expanding. With over 300 million active mobile gamers in India, it’s just a matter of time before the country’s sports authorities realise the esports industry’s actual potential. This is the ideal time for Indian sports authorities to create responsible infrastructure and policies that will mould India’s future esports community.We hope to see more initiatives that can help young mobile gamers excel in their e-sportsmanship by getting access to game-related training and high-performance equipment. Short term efforts like tax reliefs on esports winnings would further help the youth to continue their pursuit in making esports a permanent career.”
