India gives partial relief on tax to online gaming firms

By Nikunj Ohri

NEW DELHI (Reuters) -India has decided to levy taxes on online gaming companies on the total funds deposited to play online games and not on every bet, federal Finance Minister Nirmala Sitharaman said on Wednesday, offering some relief to the industry.

Last month, India decided to impose a 28% tax on funds that online gaming companies collect from their customers for every bet, shocking the nascent $1.5 billion industry which is backed by global investors.

More than 100 gaming companies and top investors like Top Tiger Global and Peak XV, previously known as Sequoia Capital India, wrote to government asking it to reconsider the decision.

The decision was taken by the Goods and Services Tax Council, made up of finance ministers from all Indian states and chaired by Sitharaman.

Sitharaman said the government aims to impose the tax from Oct. 1 and a review of the decision would be undertaken in the next six months.

Some industry watchers said the 28% tax is still higher for smaller players to survive.

While this will certainly afford some amount of relief to the online real money gaming sector, many smaller start-ups in this segment may still get very badly hit once this higher GST comes into force, said Sudipta Bhattacharjee a partner at Khaitan & Co.

(Reporting by Nikunj Ohri; Editing by Jan Harvey, Kirsten Donovan)

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