Video gaming firms seek distinction from RMG companies in letter to PMO

Stakeholders have requested the government to break the existing categorisation of online games into two separate categories - video games and real money games, "for fair and equitable policymaking"

In a letter to the Prime Minister’s Office (PMO), a consortium of over 70 Indian video game studios, including Outlier Games, SuperGaming, and Newgen Gaming, has asked for the creation of a comprehensive policy for the gaming industry that differentiates video games from real-money games.

Sent on July 8, the letter presents 10 key recommendations to the PMO and the Ministry of Information and Broadcasting (I&B) as part of the national Animation, Visual Effects, Gaming, Comics, and Extended Reality (AVGC-XR) policy, aimed at accelerating growth in the nascent sector.

Industry stakeholders have asked the government to separate online games into two categories — video games and real-money games — “for fair and equitable policymaking”.

This comes at a time when Indian real-money gaming firms are reeling from a 28 per cent blanket tax on online gaming. Skill gaming platforms previously paid 18 per cent goods and services tax (GST) on platform fees, also known as gross gaming revenue. The new rules, which do not distinguish between games of skill or chance, came into effect on October 1, 2023.

“In India, these starkly different categories have been consolidated under an overly broad term of ‘online games’. The lack of differentiation has led to widespread confusion when the GST amendment was introduced, as online games exist in both the 18 per cent and 28 per cent GST brackets,” the letter read.

The companies said that video game firms have been subjected to multiple show-cause notices and tax raids, while banks and payment gateway companies have also denied them services.

Moreover, they claim that India’s 18 per cent indirect tax on video games is one of the highest globally, and recommend reducing it to 12 per cent.

The letter further recommends appointing the I&B ministry as the nodal agency for video games, creating a designated AVGC-XR wing, and appointing a nodal officer.

However, in 2022, the government set up an AVGC task force, which recommended a national AVGC-XR Mission with a budgetary outlay.

According to the letter, the Indian video game industry — composed of purely entertainment-oriented digital games without monetary staking — will be worth $942 million in 2024 and is projected to reach $1.6 billion by 2029.

Gaming firms have also urged the government not to impose regulations “prematurely” on the video game industry and have sought an audience with the government to “help facilitate the development of a conducive policy framework for our sunrise sector”.

Developing, testing, and deploying video games for proprietary platforms like PlayStation, Xbox, Nintendo Switch, and Virtual Reality requires proprietary hardware known as development kits and test kits.

Companies have sought to “exempt these kits from import/Customs duties, integrated GST, and any cess”, and create “a new reference ID for Customs to streamline and efficiently process imports of these kits”.

Key recommendations

 

- Break up the term “online games" into distinct categories of "video games” and “real money games” 

- Move video games from 18% to 12% GST bracket

- Appoint I&B ministry as nodal agency for video games

- Rationalise import duties,  ease customs process for crucial proprietary development hardware