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Reconsider 28% GST Imposed On Online Gambling: VCs Write To PMO
The investor group also stated that skill-based real-money gaming is India's largest gaming sub-sector. The tax will perhaps result in a write-off of the USD 2.5 billion in capital invested in this sector
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As many as 30 domestic and Indian investors have written to the Prime Minister's Office (PMO) to request a reconsideration of the GST Council's decision to levy a 28 per cent GST on online gambling.
Among those who have signed the letter are Kalaari Capital, Peak XV Partners, Orios Venture Partners, Tiger Global Management, Alpha Wave Global, and Steadview Capital.
Investors said in a letter, “The decision of the 50th GST Council has the unintended consequence of equating the constitutionally protected legitimate online skill gaming industry with gambling, betting and other “games of chance”. We invested in this sector with the vision to make India the gaming capital of the world, and make the country a net exporter of innovation in gaming and allied areas."
The GST Council imposed another major setback to the real-money gaming business earlier this month when it decided to levy 28 per cent GST on full face value for online gaming enterprises, with no distinction between games of skill and games of chance.
The investor group also stated that skill-based real-money gaming is India's largest gaming sub-sector. According to the letter, the skill-based real-money gaming business also employs a sizable section of the country's game developer community.
According to the letter, the industry has attracted USD 2.5 billion in global funding across nearly 400 real-money gaming firms, with some of these startups also becoming unicorns.
According to investors, the present GST proposal will create the most onerous tax system for the gambling sector in the world, perhaps resulting in a write-off of the USD 2.5 billion capital invested in this sector. This will also have a negative impact on prospective investments worth at least USD 4 billion over the next three to four years.
According to the letter, the impact on the industry may result in the loss of over 50,000 high-skilled employment and a further loss of livelihood opportunities for over 1 million Indian people who are indirectly linked with this industry. It added, "The industry also spends roughly USD 1 Billion in advertisements, which would be completely wiped off, leading to a cascading adverse impact on the larger media and entertainment industry."