A group of 30 companies including both domestic and global that invests in online gaming has written to Prime Minister Narendra Modi, to review the 28% GST that is levied on the industry. The industry stakeholders have also requested an audience with the Prime Minister or officials from the PMO.
The investors in the letter has mentioned that this tax would lead to a potential write-off of the $2.5 billion capital invested in the sector.
"The current GST proposal will set up the most onerous tax regime for the gaming sector globally, which will lead to a potential write-off of the $2.5 Billion capital invested in this sector which will adversely impact prospective investments to the tune of at least $4 Billion in the next 3-4 years and India's gaming sector," the letter read.
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Companies that have signed the letter includes, Peak XV Partners (formerly Sequoia Capital India), Tiger Global Management, DST Global, ChrysCapital, Kalaari Capital and Alpha Wave Global, Bennet, Coleman & Company Limited.
The letter has also cited examples of the UK, the US and France where levy on full face value has destroyed the industry. The letter also said that this would affect the livelihood of many Indians.
“We submit most humbly, that this deleterious impact on the industry is expected to result in loss of over 50,000 high skilled jobs and a further loss of livelihood opportunity for over one million Indian citizens who are indirectly associated with this industry,” it added.
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In addition, the letter pointed out that the GST council's decision is contradicting the constitutional protection given to legitimate online games of skills.
The GST council last week, levied 28% GST on all online games, horse racing and casinos on the full face value. The industry stakeholders had called this move a 'catastrophic blow' to the industry.