Harshit Singh
In brief,
- international investors ask Modi to reconsider the 28% gaming tax.
- which puts $4 billion in investments at risk.
- Investors are shocked by the government’s decision on the gaming tax.
Tiger Global, Peak XV, and Steadview Capital, among other international investors, have signed a letter to Prime Minister Narendra Modi pleading with him to reconsider the recently enacted 28% Goods and Services Tax (GST) on online games using real money.
According to the letter obtained by news agency Reuters, the investors contend that this tax may have a negative effect on potential investments worth $4 billion in the online gambling industry.
The levy on money collected from clients by online gambling companies was recently revealed by the government. Fantasy cricket games have become extremely popular, but there are also concerns about player addiction.
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The decision to implement the tax was met with shock and dismay by the investors, who said in their letter that it would “substantially and meaningfully erode investor confidence in the backing of this or any other sunrise sector in the Indian tech ecosystem.”
The letter emphasised the possible negative implications, emphasising that the tax decision might prevent future investments from growing in India by at least $4 billion over the following three to four years.
The office of Prime Minister Narendra Modi has not yet responded to the investors’ request. The tax plan is presently pending Parliament’s approval.
It should be mentioned that prominent investors in Indian gaming firms like Dream11 and Mobile Premier League include Tiger Global and Peak XV, formerly Sequoia Capital India.
Despite requests from the gaming industry, a majority of ministers on the government’s tax panel believe that wagers on online gaming sites are a “social evil” and that there is no need for further dialogue with the gaming industry on the issue.
In a recent letter to the finance ministry, more than 100 online gaming companies shared the same worry, stating that the levy will deter international investment and jeopardise the $2.5 billion already committed to the industry.
