Gaming cos innovating to survive 28% GST burden
In a bid to offset some of the impact on their margins hit by the 28% Goods and Services Tax (GST), over four months after it came into effect on October 1, the online gaming industry is looking to innovate and even incentivise users.
“Operating costs of gaming companies have increased by 4x to 6x times after the implementation of 28% GST on deposits. Companies are trying to offset this increased cost by reducing their marketing budgets, laying off employees and adoption of other cost-cutting measures at different levels to survive,” said Aman Gupta, VP, finance, Witzeal Technologies, a gaming company that operates the popular Big Cash platform.
As per reports, major industry players have already started providing special cashback offers and incentives to offset the GST burden on players. Some of them are also looking to put more money into advertisements and create new users to increase profitability. Witzeal Technologies, too, is “looking for other innovative models on the product side to provide a cutting-edge gaming experience to our users by enhancing our existing games and introducing other innovative things to increase user engagement”, said Gupta, without giving further details.
As per Manish Mishra, partner, and head of practice, indirect tax, JSA Advocates and Solicitors, industry players are also introducing new variations in their gaming models to keep consumers hooked. “Another option that they may explore is to introduce games with a low-entry threshold and with a wide player base to ensure that the consumer is not impacted by the quantum of tax suffered,” he added.
