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

Industry stakeholders have requested the newly formed government to break the existing categorisation of online games into two separate categories — video games and real money games, “for fair and equitable policymaking.”

This comes at a time when Indian RMG firms are reeling from a 28 per cent blanket tax 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, which do not make a distinction 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.’ Lack of differentiation has led to widespread confusion when the GST amendment came in as online games exist in both 18 per cent and 28 per cent GST brackets,” the letter read.

The companies said that firms making video games were subject to multiple show-cause notices and tax raids, while banks and payment gateway companies have also been denying them services.

Moreover, they claim that India’s 18 per cent indirect tax on video games is one of the highest globally, and recommend bringing this down to a 12 per cent bracket.

The letter further recommends appointing MIB as the nodal agency for video games, as well as creating a designated AVGC-XR Wing and appointing a nodal officer.

Currently, the Ministry of Electronics and Information Technology (MeitY) is the nodal ministry for all matters related to online gaming. However, in 2022, the government set up an AVGC task force which, in a report, recommended a National AVGC-XR Mission with a budgetary outlay.

As per the letter, the Indian video game industry – made up of purely entertainment-oriented digital games that do not have an element of 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 Centre to not 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.”

“Despite several requests to be involved in policy discussions, we were never given an audience. We hope at least now we get invited to deliberate on the unique circumstances of video games that are far different from real money games,” said Harish Chengaiah, founder and chief executive officer of Outlier Games — organiser of the representation.

Furthermore, in the letter, firms have recommended rationalising import duties and easing customs processes for “crucial proprietary development hardware.”

Developing, testing, and deploying video games for proprietary platforms like PlayStation, Xbox, Nintendo Switch, and Virtual Reality require proprietary hardware known as Development Kits and Test Kits.

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

Companies have also asked MIB to issue a notification that restricts media from using images of video games in coverage related to real money games.

Other recommendations include bolstering skilling and vocational training, creating standards for higher education in game development, and setting up financial assistance to improve access to international video gaming events.