Ashneer Grover, the co-founder of BharatPe and former judge of the reality show Shark Tank India, on Thursday again slammed the GST Council’s decision to impose a 28 per cent tax on online gaming and said the decision has become an “existential issue for the industry”.
In a video shared on his Twitter handle on Thursday, Grover said till now, there is an 18 per cent GST on the gaming company but now the government intends to impose a 28 per cent GST on the gamer.
Explaining the math, Grover said, “Let’s understand the math of it through an example. Let’s say, two people play a Rs 100 game by putting Rs 50 each. The one who has lost will lose the entire Rs 50. But, the one who won will get a part of Rs 50 as a profit. Till now, there was a GST of Rs 1.5, which will now increase to Rs 22 after the imposition of the 28 per cent GST. It is an increase of 1,300 per cent, not 10 per cent. If we talk about GST plus TDS, it used to be Rs 13.5 till now. This will now be doubled to Rs 28.”
“This whole amount will be deducted from the gamer’s profit, who earlier used to earn Rs 28 but will now earn just Rs 14,” Grover, who is also the founder of online cricket game CrickPe, said in the video.
He said that even if the gaming industry gives its entire revenue, it cannot be compensated. “So, this has become an existential issue for the gaming industry. Because, why would a gamer come to play for such a small profit? If gamer does not play, where would we earn our revenue from? This will also affect the government’s tax revenue.”
Comparing the GST imposition on the gaming industry with other industries, Ashneer Grover said that in the case of the stock market or mutual fund, GST in imposed on the brokerage charges, not on the total investment.
Urging the government not to let the potential of the industry get killed, he requested the government to “have a conversation with the gaming industry to understand our economics”.
Last week, the GST Council in its 50th meeting decided to impose a 28 per cent tax on online gaming, horse racing and casino. “Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of Horse Racing and on the full value of the bets placed in case of the Online Gaming,” the finance ministry said in a statement.
After the GST Council decision, Ashneer Grover last week also said, “It was good fun being part of the fantasy gaming industry – which stands murdered now. $10 Bn down the drain in this monsoon. Time for startups Founders to enter politics and be represented – or this is going to be spate industry after industry.”