Quick Summary
In response to the new Goods and Services Tax (GST) regime in India, online gaming companies are taking creative measures to prevent customer loss. They are absorbing the 28% GST deduction on deposits and compensating users for at least the next two to three years. However, industry experts warn that this strategy could lead to the consolidation of the online gaming sector, with smaller firms facing potential closure. Leading companies such as Dream11, Mobile Premier League (MPL), and WinZO h
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FAQ :
Online gaming firms are offering cashbacks to absorb the 28% Goods and Services Tax (GST) deduction on user deposits. This is to ensure users receive their full deposit amount for gameplay and to maintain user satisfaction and engagement.
Industry experts suggest that larger companies have the financial capacity to sustain these cashback offers for at least two to three years. Smaller companies, however, may not have the resources to continue this practice.
Smaller online gaming companies may struggle to afford the costs associated with absorbing the GST deduction. This could lead to them being unable to compete and potentially facing closure, resulting in consolidation within the industry.
Dream11 offers 'discount points' to offset GST. MPL provides a cashback equal to the GST deduction. WinZO offers a bonus based on the deposit amount, for example, a Rs 50 bonus for every Rs 100 deposited.
No, concerns have arisen about compliance and applicability, as some states are yet to clear amendments for their State GST (SGST) laws. The All India Gaming Federation has appealed to the Ministry of Finance regarding this delay.
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