India's online gaming industry is likely to see a substantial revenue loss to the extent of ₹75,000-76,000 crore by FY28, as per a new report by consulting firm EY.
Even as the gaming industry is poised to see significant growth in the coming years, the imposition of 28% GST could prove very costly for the industry
EY's 'New Frontiers' report unveiled India's vast gaming community, standing at 42.5 crores, securing the global second position. Boasting a robust 28% Compound Annual Growth Rate (CAGR) from FY20-23, the industry surged to ₹16,428 crore, projecting a sustained 15% CAGR until FY28.
The RMG domain, a pivotal player with an 84% share in FY23, housing over 400 startups, anticipates a significant dip to 75.4% by FY28 due to the expected GST amendments.
Industry insiders foresee RMG potentially contributing ₹6,500-6,800 crore in direct taxes and a staggering ₹75,000-76,000 crore in indirect taxes between FY24-28. However, the proposal of a 28% tax rate on online gaming, debated in the 50th GST Council meeting, awaits a final decision on valuation in the subsequent 51st meeting.
In FY23, RMG fetched ₹1,700 crore in GST revenues. But if GST rates and valuation methods shift as speculated, experts envision an astounding 113% surge from FY23, reaching an estimated ₹75,000-76,000 crore in GST collections by FY28.
This looming risk of a substantial revenue slump within the RMG segment has triggered concerns across the gaming industry. The potential implications could profoundly affect the industry's growth trajectory and financial contributions.
Awaited decisions by the GST Council carry significant weight, with the potential to reshape the gaming landscape and profoundly impact stakeholders and the industry's financial future.