Many gaming startups in India are struggling after the government raised the Goods and Services Tax (GST) from 18% to 28% on entry fees and bets in online games last year. A report by Ernst and Young (EY) and the US-India Strategic Partnership Forum (USISPF) reveals that over half of these startups saw their revenues decline sharply.
Before this tax increase, gaming companies paid an 18% GST on platform fees. But with the new GST rate, startups are finding it harder to make money. Out of 12 gaming firms surveyed, only five managed to grow their revenues. The rest either stayed at the same level or saw their earnings drop.
Even though gaming apps can make money from things like in-app purchases and ads, the higher GST has made it tough for startups to grow. Many are struggling to get funding, and some have had to cut jobs or stop hiring new employees. One startup even had to shut down completely because of these financial challenges.
Big gaming companies like Gameskraft and Delta Corp have been asked to pay huge sums in GST, amounting to a total of INR 1.12 lakh crore. Some of these companies have gone to court to challenge these tax bills.
The situation is especially tough for smaller gaming startups, which are finding it hard to survive under the heavy tax burden. Industry experts are calling for the government to reconsider the GST rates to support the growth of gaming startups and ensure their future in the market.
