ETMarkets.com“The silver lining in the cloud is we welcome any clarity that emerges in our industry. The downside is if the taxes are too aggressive, it may stunt the potential growth that the industry,” says Nitish Mittersain, MD & Founder, Nazara Tech.
Who better than you to really understand what 28% tax is going to mean for the gaming sector at large? It seems as if the GST council wants this sector to be taxed at the highest bracket of 28%. How big an impact is it going to have?
A couple of points. Firstly, this increase in tax from 18% to 28% itself is not the issue. The industry has proactively welcomed it. I think the issue really is on what is the tax applicable on? Is it on the rake or is it on the platform fee? Or is it on the deposit or the entry fee?
Globally, it is largely on the rake or the platform fee but we will have to see what the fine print is and what is really going to happen here. The bigger picture is that the gaming industry in India is in its infancy and there is a long way to go. With or without increase in tax, the industry will continue to grow. It may have some obstacles in the interim but on the positive side, Nazara has always been saying that we have been a little conservative on the skill-based real money gaming space because of lack of clarity.
So, at least the silver lining in the cloud is we welcome any clarity that emerges in our industry. The downside is if the taxes are too aggressive, it may stunt the potential growth that the industry can have in the near future.
Is it not high enough to keep the gamers away? In that sense then it should not be impacting companies like yours. I would imagine you will anyway pass on the tax?
Yes, again when it comes specifically to Nazara, our exposure to the skill- based, real money gaming space where these taxes are really applicable is around 5%. So there is a very limited impact on us specifically of this change.
Who better than you to really understand what 28% tax is going to mean for the gaming sector at large? It seems as if the GST council wants this sector to be taxed at the highest bracket of 28%. How big an impact is it going to have?
A couple of points. Firstly, this increase in tax from 18% to 28% itself is not the issue. The industry has proactively welcomed it. I think the issue really is on what is the tax applicable on? Is it on the rake or is it on the platform fee? Or is it on the deposit or the entry fee?
Globally, it is largely on the rake or the platform fee but we will have to see what the fine print is and what is really going to happen here. The bigger picture is that the gaming industry in India is in its infancy and there is a long way to go. With or without increase in tax, the industry will continue to grow. It may have some obstacles in the interim but on the positive side, Nazara has always been saying that we have been a little conservative on the skill-based real money gaming space because of lack of clarity.
So, at least the silver lining in the cloud is we welcome any clarity that emerges in our industry. The downside is if the taxes are too aggressive, it may stunt the potential growth that the industry can have in the near future.
Is it not high enough to keep the gamers away? In that sense then it should not be impacting companies like yours. I would imagine you will anyway pass on the tax?
Yes, again when it comes specifically to Nazara, our exposure to the skill- based, real money gaming space where these taxes are really applicable is around 5%. So there is a very limited impact on us specifically of this change.
But if the 28% tax comes as an entry fee for the skill-based real money gaming businesses, then it is far more than the commission they make or the rate that they make on every transaction and therefore it may completely upset the economics of that business and that is really where the challenge is.
( Originally published on Jun 29, 2022 )
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