Union Budget 2025: India’s online gaming industry awaits tax relief and policy clarity

Rajashree Seal January 31, 2025
Union Budget 2025: India’s online gaming industry awaits tax relief and policy clarity

With the Union Budget 2025 set to be presented on 1 February 2025, India’s gaming industry is eagerly awaiting key policy decisions, particularly regarding taxation. The online gaming industry is seeking a stable policy framework that encourages investments, job creation, and a more balanced taxation system. This will be the first budget since the Lok Sabha elections in June last year, and industry stakeholders are urging the government to address regulatory concerns, particularly regarding taxation.

The sector remains burdened by the 28% Goods and Services Tax (GST) on deposits, a major increase from the previous 18% on service fees or gross gaming revenue. Despite waiting several months for a promised review, gaming companies continue to struggle, with many domestic players shifting to offshore platforms that advertise themselves as “No-GST”. Industry stakeholders are now pushing for tax relief and policy clarity, along with stronger support for the AVGC (Animation, Visual Effects, Gaming, and Comics) sector to drive innovation and global competitiveness.

Speaking about the expectations of the gaming sector to SiGMA News, Amrit Kiran Singh, President of the Skill Online Games Institute (SOGI), expressed optimism about the potential of the global online gaming industry, which is valued at $300 billion. He said, “The huge $300 bn Global Online Games Industry (4 times the size of the Movie + Music industry together) has the potential to contribute significantly, for several decades, to India’s GDP growth and jobs, like IT has done.”

Singh also highlighted the challenges posed by the recent GST hike, stating, “Negatives like addiction can be mitigated through use of ‘smart tech’. The massive 1400% increase in GST in October 2023 ostensibly introduced from a moralistic perspective, has not met its objectives as it has only caused 83% of Indian player spends on Online Games to migrate from Indian platforms to ‘no tax’ offshore (mainly Chinese) platforms.”

He further pointed out the difficulty in regulating these platforms: “Over the past 15 months it has been impossible to block offshore platforms due to ‘domain farming’ or get them to register and pay taxes in India.” Singh concluded by stressing the need for action, saying, “There is an urgent need to address the elephant in the room (abnormally high taxes) and correct the situation, through the ‘review’ mechanism that the Finance Ministry had promised the industry.”

E-Gaming Federation’s Anuraag Saxena underscored the industry’s need for regulatory clarity and stability. Speaking to news agency PTI, he said, “We need policy clarity and policy stability, which is what both domestic investors and foreign investors look for.”

He further emphasised on the importance of rational and progressive taxation, stating, “We would like more rational and progressive taxation, which honestly, over the last 10-12 years, the government has been able to achieve through the whole GST process, which was really cumbersome if you think about it. Ideally, we want tax policies that provide a fillip to the industry.”

Saxena also highlighted that several industry-suggested measures could significantly contribute to the sector’s growth. The E-Gaming Federation is also working with the Information and Broadcasting Ministry on the ‘Create in India Challenge’ to promote urban development awareness through gaming initiatives like ‘CityQuest.’ These initiatives aim to integrate gaming into broader societal and economic frameworks, positioning it beyond just entertainment.

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