Real money gamers to play less following new GST, TDS rules, says report

New Delhi: A large number of real money gamers said they are likely to play less following the decision of the government to charge a steep 28% goods and services tax (GST) on gamers.

As per a new report ‘State of India Gaming’ by Lumikai published in collaboration with Google, released on Thursday, 60% of those surveyed said this, along with the changes in tax deducted at source (TDS) will impact how much they play. Lumikai is an gaming and interactive entertainment venture fund.

In September, Mint reported that the finance ministry’s revenue department notified the new tax rate via an amendment to the Central Goods and Services Tax Act, 2017 following the 51st GST Council meet which recommended a tax rate of 28% on gross revenue of online gaming firms. This has gone up from 18% previously to 28%.

The report said that the tax demand exceeds the revenues of the gaming sector as the value of the notices served for a period between FY18 and FY23 was $8.9 billion versus the revenue of $4 billion. It said government policies have established separate legislation and taxation between games with cash-based outcomes and games with non-cash based outcomes.

Also, funding in the gaming sector has plummeted 75% year-on-year in 2023, mirroring the global decrease of 79%. This figure stood at $156 million in 2018 and touched its peak of $1,744 million in 2021, falling more than three times to $567 million in 2022.

But the sector is potentially still growing as there were about 15.4 billion gaming downloads in FY23, marking India as one of the largest gaming markets in the world. There are over 568 million gamers in the country—over 50% of all Indian internet users. About 140 million gamers today are paying users, an increase of 17% year-on-year against last year.

About 50% gamers are within the age bracket of 18 to 30 years, with a male-to-female ratio of roughly 60:40. The report said the increase in the number of gamers from non-metro cities rose to 66% in FY23 from 57% in the previous fiscal. About 62% of users said UPI is their preferred mode of payment for games.