The recent decision to apply 28 per cent Goods and Services Tax (GST) on online games by 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. The campaigns project a homogenous image and suggest that the entire games industry of India is adversely affected by the government’s imposition of 28 per cent GST.
Recently, Esports Federation of India (ESFI) president Vinod Tiwari cleared the confusion regarding GST having any sort of impact on the Indian esports or video gaming industry.
However, to avoid further skepticism, the Indian video games industry has written to the PMO, Ministry of Electronics and Information Technology (MeitY) and Ministry of Information and Broadcast asking for 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. Important details from the letters are as follows:
- 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 per cent GST
bracket.
- Indian video games industry (valued at US$812 million as of 2022) are unaffected by the recent
developments on the GST as these sectors continue to be taxed at 18 per cent and supported by
the Indian government through the planned AVGC-XR Policy.
The letter states: “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 per cent 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 US$184 billion does not include revenue from RMGs and Fantasy Sports.
Our industry has consistently advocated for clear differentiation and categorisation of video games as separate entities from ‘iGaming’ (RMGs and Fantasy Sports) due to the mutually exclusive nature of these industries.
We will continue to address this issue and other areas of interest in our representation efforts with various ministries. Our goal is to create a conducive environment for the video games sector and establish a framework that ensures a safe and secure ecosystem for Indian gamers engaging in interactive entertainment arts.”
Indian companies that have signed this representation letter include Nodding Heads Games — developer of Raji: An Ancient Epic, FAU-G developer Dot9 Games as well as Indus and MaskGun creator SuperGaming to name a few. The organiser of this representation is Chennai-based Outlier Games.
Outlier Games founder and game director Harish Chengaiah said, “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 “One 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 three-five years it is undoubtedly going to be a sunshine sector.”
SuperGaming co-founder and CEO Roby John said, “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.”
GameEon Studios founder and CEO Nikhil Malankar said, “India possesses immense potential in the gaming space, with a strong presence in mobile, PC and console gaming. Despite recent concerns surrounding the 28 per cent 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.”
DIOSC Gaming co-founder Biprajyoti Chakraborty said, “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 and regulations can lead to the destruction of the Indian gaming industry which has the potential of becoming the industry leader in game production.”
Hypernova Interactive co-founder and CEO Mayur Bhimjiyani said, “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 government of India 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 per cent GST announcement. Not video games.”
Penta Esports CEO and founder Anurag Khurana said, “While the revised GST of 28 per cent will be levied on online games, it certainly does not apply to esports. It should be made clear that the 28 per cent 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.”
GodSpeed Games managing director Ranbeer Hora said, “The recent announcement of imposing a 28 per cent GST on casinos and Real Money Gaming doesn’t come as a surprise to me. However, there seems to be a misunderstanding circulating on various social media platforms, suggesting that this taxation applies to video games as a whole. This is an incorrect interpretation, as the statement clearly states that the taxes are applicable to the full face value of bets in online gaming, casinos and horse racing. It is crucial to understand what falls under the category of online gaming in this context, as it encompasses the aforementioned genres as well as Real Money Gaming. Industry representatives have been engaging in ongoing discussions with the authorities to establish a clear distinction between video games and the genres mentioned above. This is the need of the hour and will help in framing the correct set of rules for the video games industry and will prove to be rewarding for the growth of this sector.”
Street Lamp Games founder and CEO Deepak Gurijala said, “Video games are an immersive form of entertainment, fostering creativity, skill development, and social interaction. They are distinct from Real Money Games, which involve gambling and monetary transactions. It is essential to understand the government’s decision to differentiate these two realms is crucial, as it helps to debunk the misconception that video games and Real Money Games have similar taxation policies. This clarity is of utmost importance, as the misconception brings uncertainty to fellow game developers and the gaming industry, hindering their ability to innovate and contribute to the vibrant gaming ecosystem.”
Weloadin Studio co-founder and managing director Mario Royston said, “It is worth noting that RMG and fantasy sports are not considered part of the video game industry in other countries. However, the negative focus on RMG has led to misconceptions about the entire video game industry in India for a considerable period of time. The classification of Real Money Gaming and fantasy sports as online gaming has had adverse effects on the video game industry in India, primarily due to concerns about the wagering aspects associated with RMG. Recognising the need for clarity, the Indian government has taken steps to differentiate RMG and fantasy sports which involve Real Money betting from the video game industry which is purely made to entertain and educate people as a form of art like movies. This differentiation is evident through the implementation of a 28 per cent (GST) specifically for RMG and fantasy sports, while video games are subject to an 18 per cent (GST) rate.”
XSQUADS Tech founder and CEO Jemish Lakhani said, “The Indian video game industry is becoming self-reliant (Aatmanirbhar), but a 28 per cent 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.”
Lucid Labs founder and CEO Chirag Chopra said, “Yet again, the Indian gamer finds himself strangled in a pile of unwanted mud. Let me simplify it for you: imagine you have a basket filled with both apples and oranges. Now, just because they share the same basket doesn’t magically turn them into the same fruit, right? Just because Real Money Games and your favourite games share the same industry, it doesn’t automatically put them in the queue for similar tax treatment. The government knows better, and so do you, my fellow Indian gamer. Let me break the bubble – the Indian game industry is more than Real Money Games, and believe it or not, they are here to stay. No matter what they try to tell you on social media, your beloved games will not be taxed 28 per cent; that privilege is reserved for your truly, Real Money Games. So, as long as you are not chasing the fake paradise, you can continue enjoying your Clash of Clans, Valorant, and PUBG.”
Firebolt Entertainment founder and director Tarun Hinduja said, “With every new law, comes some amount of misinterpretation. The government of India has always frowned at gambling in any form and has now strengthened its stand by imposing a 28 per cent 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.”
Below attached is the signed letter by industry stakeholders.