‘Time for startup founders to enter politics’: Ashneer criticises 28% GST on online gaming

‘Time for startup founders to enter politics’: Ashneer criticises 28% GST on online gaming

BharatPe founder Ashneer Grover has voiced strong criticism against the Goods and Services Tax Council’s recent decision to impose a 28% GST on online gaming, charging the full value.

Known for his participation in Shark Tank India, Grover expressed deep disappointment at the move, emphasizing the importance of active engagement in politics by startup founders to secure adequate representation. By openly opposing the tax measure, Grover highlighted the need for entrepreneurs to use their influence and advocate for favorable policies that support the growth and development of their respective industries.

As an influential figure in the startup ecosystem, his call to action resonates with others who believe that a proactive involvement in the political landscape is essential to safeguard the interests of startups and foster a conducive business environment.

In a series of tweets, BharatPe founder Ashneer Grover expressed his concern and frustration over the recent decision of the Indian government to impose a 28% GST on real money gaming. He declared that this move could potentially have a devastating impact on the real money gaming industry in India.

Grover provided an example, stating that if someone invests ₹100 in a gaming platform with a ₹72 pot entry, and they win ₹54 after platform fees, they will be required to pay an additional 30% TDS (Tax Deducted at Source) on their winnings. He illustrated that such heavy taxation could discourage people from participating in real money gaming and undermine the growth of the industry.

Furthermore, Ashneer Grover urged startup founders to take an active interest in politics and seek adequate representation. He believes that without effective advocacy and representation in the political arena, more industries could face similar challenges and difficulties. By making this call, Grover emphasizes the need for entrepreneurs to use their collective influence to shape policies that are conducive to the growth of startups and other sectors in the Indian economy.

In its 50th meeting in New Delhi, the Goods and Services Tax Council made a decision to impose a 28% tax on e-gaming, without distinguishing between games based on skill or chance. Union Finance Minister Nirmala Sitharaman clarified that the taxation would be based solely on the value generated by these games and not on whether they are skill-based or chance-based.

Discussions on online gaming were significant, and the Ministry of Electronics and Information Technology (MeitY) is expected to provide a list of games for inclusion or exclusion. Despite criticisms from a major section of the industry, the government remains firm on its position regarding taxation and plans to align with MeitY’s rules.

The decision to impose a 28% tax rate has received vehement disapproval from various quarters within the industry. Many stakeholders believe that this high taxation rate could significantly impact online gaming platforms and discourage participation. The industry’s concern lies in the potential negative consequences for growth and development in the sector due to this tax measure.

Aaditya Shah, the Chief Operating Officer of IndiaPlays, expressed concern over the lack of differentiation between skill-based games and casinos/betting apps in the government’s decision to impose a 28% tax rate on online gaming. He emphasized that these two categories must not be treated the same way, as they operate on fundamentally different premises.

Shah further pointed out that the introduction of such a high tax rate not only restricts the capacity of online gaming platforms to innovate and develop new games and technologies but also diminishes their competitiveness in the market. Additionally, the financial strain resulting from the tax hampers their ability to expand into new markets and attract a wider customer base.

Pratik Jain, a Partner at Price Waterhouse & Co LLP, shared similar sentiments, stating that while the government clarified the nature of the proposal, it would have been more favorable to make it prospective to resolve past disputes. The decision to levy a 28% tax on the gross value for both online gaming and casinos was not in line with the industry’s expectations and raised concerns about its impact on the gaming sector’s growth and stability.

The stakeholders’ remarks highlight the need for a balanced and thoughtful approach in taxation policies for the online gaming industry, taking into account the distinctions between skill-based games and games of chance to promote growth and development in the sector.

Ashneer Grover expressed his sorrow over the fate of the fantasy gaming industry, which he found enjoyable to be a part of. However, he lamented that the industry has now been severely impacted and described it as “murdered.” He conveyed his deep disappointment, stating that approximately $10 billion worth of investments and opportunities have now gone to waste, akin to being “down the drain in this monsoon.” The sudden turn of events has evidently left Grover disheartened, as the industry he once found exhilarating and promising has now suffered significant setbacks, causing substantial financial losses and hindering growth prospects.