It has been one year since the implementation of the 28% Goods and Services Tax (GST) on online gaming in India. While both companies and consumers have adjusted to the higher tax rate, a review of this levy remains a top priority for industry stakeholders.
An industry expert recently shared insights on the ongoing challenges faced by gaming companies. “We collect GST from consumers, but the burden is ultimately borne by the companies,” he explained in an interview with Business Today. The expert noted that while the collected GST is returned to customers in the form of cashback, this practice has negatively impacted company margins.
“Profitability has taken a hit over the past year. We are now focused on innovating around customer engagement and optimizing our marketing expenditures to improve our profit margins,” he added. Historically, the company enjoyed margins of 25% to 30%, but these have flattened as financials are still being finalized.
The expert expressed hope that the government and the GST Council would reconsider the tax rate once they review the filings submitted by online gaming companies to the Registrar of Companies. “We are actively communicating with the government, and our federations are working diligently on this matter,” he stated.
One notable player in the market, A23, a skill gaming platform with over 70 million registered users, has recently launched the A23 Rummy Maha Mela. This exciting 100-day online rummy event kicked off on October 5 and is set to run until January 12. The expert anticipates a surge in user acquisitions and increased customer engagement during this festive period.
Additionally, the industry is making strides in promoting responsible gaming. “Responsible gaming is integral to our culture. We monitor customer behavior, predict trends early, and provide warnings to users. Our self-exclusion policies and strong code of conduct further underline our commitment to this cause,” he explained.
Looking ahead, the expert hopes the government will consider whitelisting legitimate gaming operations and apps, which would not only benefit companies but also enhance the customer experience. As the industry continues to navigate the complexities of taxation and regulation, stakeholders remain optimistic about the future of online gaming in India.
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