Budget 2024: What do the online gaming and esports industries expect?

In the upcoming Interim Budget 2024, online gaming and esports industries expect the Centre to clarify the taxation regime and allocate dedicated funds to develop the infrastructure for the sector. Finance Minister Nirmala Sitharaman will announce the Budget on February 1. 

2023 has been particularly important for the online gaming sector. In July, the Goods and Services Tax (GST) Council decided to impose a blanket tax of 28 per cent on online gaming. Skill gaming platforms earlier paid 18 per cent GST on the platform fees, also known as Gross Gaming revenue (GGR).

The new rules do not make a distinction between games of skill or chance. The Council also made registration mandatory for overseas suppliers of online money gaming and made provisions for punitive action against such suppliers, including blocking of their websites.

The changes came into effect from October 1, 2023. However, a review of the impact of the changes will be conducted in March this year.

Gaurav Agarwal, co-founder of Gamezop, said that there is a "crucial" need to support the sector.

Namratha Swamy, chief operating officer at Mobile Premier League (MPL), said that along with clarity, there is also a need to adopt a progressive taxation regime in the sector.

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"This clarity is crucial for driving the next phase of growth, as it will not only provide a conducive environment for businesses but also revive investor confidence in the sector," she said.

"A progressive taxation regime will further incentivise investment, leading to the creation of more job opportunities for our talented youth."

"It is time for India to transition from being the largest consumer of content to becoming the largest creator of content," Agarwal added.

Moreover, Namratha added that the industry also expects the Budget to pave the way for the establishment of dedicated courses in gaming.

"These courses will play a pivotal role in nurturing the next generation of game developers and professionals, ensuring a steady supply of skilled talent to fuel the industry's growth."

Esports companies and federations, on the other hand, said that they expect a dedicated allocation of funds for the sector as it has the potential to grow after its inclusion as an official medal sport in the Asian Games 2022.

Lokesh Suji, director of the Esports Federation of India and vice president at the Asian Esports Federation, said, "For establishing the infrastructure necessary for the industry's development and to nurture an esports ecosystem that positions India as a global esports hub, we hope to see a dedicated allocation of funds for the esports sector."

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"To ensure the long-term success of our esports athletes and attract more aspiring players to pursue careers in esports, we also hope for tax relief for athletes on winnings from esports tournaments," Suji added.

Adding to this, Rohit Agarwal, founder and director of gaming marketing agency Alpha Zegus, said that the taxation on esports should be slashed to 18 per cent from 28 per cent.

"From budget 2024, one of the major steps I look forward to is more 'esports' based activities moving to 18 per cent slab (from 28 per cent slab)," he said.

He added that the esports industry is also looking forward to the Centre encouraging more state governments to assign budgets for the growth and promotion of esports.

Earlier, the Bihar government announced that it would introduce esports into the school and college curriculum. It also conducted an open esports championship in the state. Experts said that funds must be allocated to all states so that they can conduct similar tournaments.

"We earnestly suggest the allocation of funds to each state government for the organisation and promotion of State Esports Championships," said KR Rohith, chief executive officer CEO of Bengaluru-based esports company Gods Reign.

Similar to Namratha, Rohith also suggested educational programs for the sector.

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"Recognising the exponential growth of the video gaming industry, we hope for the government's consideration and support in encouraging educational programs by adding esports into educational curriculums and skill development initiatives focused on gaming and esports," he said.

"This would contribute significantly to nurturing talent within the sector, aligning with the national agenda of promoting digital skills."