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28% GST - Financial Instability in Gaming Industry

  • A sudden 400% GST increase in the gaming industry alarms All India Gaming Federation, with a potential impact on employees and start-ups' viability.
  • Proposed 28% GST on internet gambling and casinos creates uncertainty for MSMEs, leading to layoffs and closures, like MPL, Hike, and Quizy.
  • Indian gaming's future innovation and stability are at risk due to unexpected GST changes, requiring the industry to navigate uncertainties and consequences.

The gaming industry has always been the center of attraction for all age groups because of the “unique” opportunities but the sudden amendments of GST are probably going to twist the rope for the employees. 

The staggering 400% increase in GST obligation appears to be amusing to the All India Gaming Federation (AIGF). In my opinion, the creative brains behind many MSMEs and start-ups appear to have a golden opportunity to gracefully exit the business world as a result of this unanticipated turn. A special 28% GST on internet gambling and casinos, with a focus on the glamorous world of entry-level bets, has been concocted by the GST Council's brilliant minds. They also intend to modify the Central GST law and distribute the script during the current monsoon session of Parliament in order to keep the performance continuing. 

Then, by the “enchanted” date of October 1st, states are supposed to follow the script and adopt these amendments in their assemblies. 

Mobile Premier League (MPL)

The Mobile Premier League (MPL) story has significantly changed as co-founder Sai Srinivas reveals a tax odyssey that rivals any suspense novel. The story's turn? The complete deposit value, not the usual Gross Gaming Revenue, will be subject to a thundering GST charge of 28%. Srinivas sombrely reveals that this turn of events may increase the tax obligation by an astounding 350–400%. The scale of this unanticipated reversal compels difficult decisions, even though the business stage frequently asks for fortitude against a 50 or even 100% rise.

These "tough decisions" end up being contradictory and poignant, which is ironic. The 350 people who have played a key role in MPL's growth are facing an unexpected exit. The story's finale is revealed: A plot in which the protagonists unintentionally leave their roles. 

This gaming unrest continues with the Hike saga. The creation of Kavin Bharti Mittal, who is also in charge of Rush Gaming Universe, takes a risky step by laying off about 55 workers, or a brutal 20% of the workforce. The cause? A direct GST shot at the internet gambling industry. Just a few days ago, a prominent company insider revealed the narrative twist, according to PTI.

“Our firm is flourishing and reaching new heights, but this 400 percent GST increase seems like a bazooka locked on us”, Kavin Mittal confesses, exposing the dichotomy.

While we'll deflect some blows, Hike/Rush will be forced to take the majority. 

Well, it's not the large-scale companies that are getting affected but also a few smaller-scale gaming start-ups are victims of this. Quizy, have already announced their cessation of operations.

"Recent developments in the tax landscape and regulatory environment have left us with no choice but to bid farewell to our beloved gaming venture," said Quizy co-founder Sachin Yadav.

The industry's future is in jeopardy due to the implementation of a 28% GST rate, endangering both financial stability and the whole innovative landscape of Indian gaming. The unexpected change has had an impact on the entire industry, causing reasonable concerns about possible closures and a diminished spirit of innovation. Although the possibility of a future re-evaluation offers a sliver of hope, the industry must deal with the current uncertainties and consequences resulting from this GST change in the interim.

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Edited by Shruti Thapa