Shillong, July 21: Global and Indian investors, including prominent firms such as Tiger Global, DST Global, Peak XV Partners, Kalaari Capital, Matrix Partners India, and Kotak Private Equity, have collectively called upon Prime Minister Narendra Modi to review the decision of imposing a 28% Goods and Services Tax (GST) on online skill gaming.
In a letter addressed to PM Modi, the group of investors expressed their concern that the proposed GST rate would establish an excessively burdensome tax regime for the gaming industry, not just within India but globally. They warned that this move could potentially lead to a write-off of the substantial $2.5 billion capital invested in the sector. Furthermore, they emphasized that such a high GST rate would adversely impact future investments, potentially affecting at least $4 billion in the next 3 to 4 years and hindering the growth of the gaming sector in India.
The investors conveyed their disappointment and shock at the 28% GST on the total value of online gaming, fearing that it could significantly erode investor confidence in supporting this emerging sector and other innovative ventures in the Indian tech ecosystem.
IANS reported that one of the major concerns raised by the investors was the inadvertent categorization of the legitimate online skill gaming industry alongside gambling and games of chance, despite its constitutional protection.
They emphasized that their investments in the gaming sector were made with the vision of making India a global gaming capital, which would foster high-skilled job creation, attract billions in foreign capital, and position the country as a leading exporter of gaming-related innovations such as animation, artificial intelligence, and visual effects.
In response to the 28% GST imposition, 127 online gaming companies and organizations penned an open letter to the government last weekend, urging it to reconsider the decision. They appealed for the reversal of the high GST rate on the full deposit value and the clear distinction between skill gaming and betting/gambling to alleviate the significant distress caused to the industry.