Delta Corp, online gaming stocks tank as 28% tax bites
时间:2024-09-29 02:56:00 阅读(143)
Shares of casino operator Delta Corp lost over a fifth of their value while those of online gaming firms crashed on Wednesday, a day after the GST council imposed a 28% tax on such firms.
According to experts, the decision is expected to be a blow to the online gaming firms as they fear the shutdown of their businesses.
While Nazara Technologies cracked over 14%, OnMobile Global fell nearly 9% and Zensar Technologies was down 1.39%. The stocks trimmed some losses before the session ended.
Nazara Technologies in an exchange filing clarified that the 28% GST on online gaming, once implemented, will apply only to the skill-based real money gaming segment of its business. The contribution of this segment to their overall consolidated revenues for the financial year FY23 is 5.2%.
Manu Rishi Guptha, founder and CEO of MRG Capital, said the council should have made a distinction between skill-based gaming and chance-based ones, with former taxed less to promote innovation.
“It is disheartening to see the government identify gaming as a promising avenue for employment generation, only to negate its potential by imposing additional GST,” said Ankur Singh, founder & CEO of gaming company Witzeal Technologies.
“Across the world, governments are actively exploring ways to foster the structural development of the gaming sector. However, in India, we find ourselves in a paradox where the government’s actions contradict its stated intentions,” he added.
The proposal to impose 28% GST on online gaming has sparked discussion regarding the potential effects on the sector and the development of a regulated local gaming industry.
According to Manish Chowdhury, head of research at StoxBox, the levy would impact the cashflow generation ability of the businesses, prompt companies to rethink over future expansion plans, limit their ability to improve their business appeal and may also lead to job losses due to the dearth of existing and new business.
Girish Sodani, head of equity market at Swastika Investmart, expressed concern that the increased GST rate may result in higher prices for gaming consoles, accessories and software, making them less affordable for consumers. This could potentially lead to a decline in sales and a decrease in the overall demand for gaming products, he added.
Till now, the online gaming firms were paying GST on the platform fee, which is the commission charged from the participant entering the game.
Simply put, if a participant entering the game pays Rs 100 as fee, then the gaming company would charge up to 20% commission which is its gross gaming revenue and on that 20% commission charged it used to pay GST to the government. Now, the companies will have to pay GST on the entire Rs 100.
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