Ashneer Grover Rings Doomsday Bells; Gaming Firm Clarifies the 28% GST Will Affect Only Real-Money Skill-Based Games

The online gaming community was hit by news that 28% GST will be implemented after the GST Council Meet. However, Nazara Technologies Ltd, in a statement released on Wednesday confirmed that this tax slab is only applicable to the skill-based Real Money Gaming sector (RMG). Their message suggests that this development will not result in a huge blow to their business model.

Also Read: Government Of India Announces 28% GST On Online Gaming During GST Council Meet

Ashneer Grover Criticizes GST Move, Calls for Entrepreneurs in the RMG Space to Have Political Representation

One of the boldest voices in the entrepreneurial space, Ashneer Grover, chimed in with his 2 cents on the matter, claiming that this could be the final nail in the coffin for the RMG, online gambling, and fantasy space. In his tweet, Grover broke down the financial implication of this move to the end-user, the player - and how it effectively discourages players from engaging with the product.

The tweet has been received in a rather mixed fashion, with community members on either side of the aisle. While a portion of the community feels that the presence of RMG and online gambling only risks conflation with online gaming (esports, online games). The other half believes that this would discourage investment in the sector, effectively rendering the space dormant. It will be interesting to see the long-term implications of this move and how online gambling and RMG companies will adapt to the new GST imposition. 

Nazara Technologies Ltd Clarify 28% GST on Online Gaming

Nazara also confirmed that the RMG sector was just a 5.2% contributor of their last financial year's revenue and said they would be taking proactive ways to deal with this situation as well.

In an interview with BQ Prime, Nitish Mittersain, founder of Nazara said "We have a strong team and I'm sure they will mitigate the impact to the extent possible. We are very confident that from an overall Nazara perspective, the revenue impact to us is going to be minimal."

Nazara further added that they are still looking towards growth and their final aim is still diversified across the segments that fall under its umbrella.

"To the extent required, the company will proactively take steps to mitigate any potential impact to this segment of our business, and we anticipate minimal impact to our overall revenues," Nazara Tech Ltd said. 

Games like Classic Rummy and Halaplay fall under the RMG category, but had plans to expand the sector. However, what the future will hold after the law is amended, will have to be seen. After the decision came out, several people from the online gaming community came forward and expressed their concerns about the high tax slab. While many raised their concerns, the underlying tone for it remained that this step could be the end of the gaming industry. However, there is no clarification on how this would impact the esports sector.