Finance Minister Nirmala Sitharaman presented the fifth and last full budget of the current union government on February 1, 2023.
In her presentation, Sitharaman announced that more clarity will be provided on the taxability of online gaming.
The government has proposed two new provisions: a 30pc tax on net winnings, at the time of withdrawal or at the end of the financial year. The existing minimum threshold limit of Rs 10,000 has also been removed.
However, the threshold limit of Rs 10,000 for TDS for lottery and crossword puzzle games, among some others, will continue.
Sitharaman said in her speech that mobile production in India increased from 5.8 crore units valued at Rs 18,900 crore in 2014-15 to 31 crore units valued at Rs 2.75 lakh crore in the last financial year.
She also announced that 100 labs for developing apps using 5G services will be set up in engineering institutions.
Though the Budget announcement didn’t specifically bring out the matters of concern related to Animation, Visual Effects, Gaming and Comic (or e-sports) segment, players welcomed some of the developments.
Rohit N Jagasia, Founder and CEO, Revenant Esports, noted that the increased mobile phone production in India will directly impact the growing interest in mobile gaming.
“India is a growing market for mobile gamers which will shape the Indian e-sports sector. Affordable mobile devices and the increasing accessibility of gaming platforms have also contributed to the growing popularity of e-sports in India. This is expected to further drive the growth of the Indian e-sports industry in the coming years,” he said.
Jagasia is also looking forward to the progress of 100 labs for app development using 5G services which will be set up in engineering institutions.
“Hopefully this could be the beginning of the 5G era in India. The announcement of removing the minimum threshold of Rs 10,000 for TDS on online gaming and providing clarity on taxability is a big step forward, however most e-sports games, like ours, don’t have any money withdrawing system so these are applicable for the online gaming sectors which are into ‘Real Money Gaming’,” Jagasia added.
Rishabh Bhansali, Co-Founder of FanClash, is ‘extremely delighted’ with the propositions made in the budget and looking forward to ‘the golden days that are in store’ for fantasy e-sports and gaming in the country.
“The enormous upsurge in mobile phone production has been the impetus for the boom of the e-sports industry in India. Pocket-friendly smartphones have taken gaming and fantasy e-sports to every corner of the country and a further decrease in its prices as the government proposes to reduce customs duty on import of certain inputs for mobile phone manufacturing will boost the sector’s growth like never before,” he said.
Animesh Agarwal, Founder & CEO, 8bit Creatives, noted that the expansion of India’s gaming business mirrors and contributes to the growth of the mobile phone industry.
He added, “According to the most recent report from the Internet and Mobile Association of India (IAMAI), the number of mobile gamers in India is projected to increase to 650 million by 2025. The previous seven to eight years have been instrumental to the relationship of mobiles and gaming in India, with numerous mobile gaming titles being released and gaining popularity among the Indian gaming community. Developer dedication to expanding mobile gaming in India and the advent of different employment opportunities through mobile gaming have all contributed to an increase in the number of Indians adopting mobile gaming. This has also contributed to the growth of the mobile device sector, as professional gamers frequently seek to upgrade their devices as they progress in their career. Even casual gamers seek better devices in their gaming journey. Interdependence of the industries is also reflected in the commitment of the mobile device companies towards strengthening their presence in the gaming community through dedicated efforts and investments.”
Lokesh Suji, Director, Esports Federation of India & Vice President of the Asian Esports Federation (AESF), noted the significant rise in mobile phone production in India in the past few years has been a game-changer for the e-sports industry in the country.
“Contributing extensively to propelling the industry to unimaginable heights, the increasing availability of smartphones in India at affordable rates has not only expanded the player base by making gaming more accessible but has also attracted investment from companies, resulting in the development of existing as well as newer games,” he noted.
“With the numbers further upscaling and 5G acting as a catalyst that fuels the industry’s flourishment, we are going to witness monumental growth within the e-sports sector in the coming years. As we are still awaiting clarity on the taxability for e-sports, we are hopeful that the decisions will be in favour of the community and impact it positively,” Suji added.
According to Rohit Agarwal, Founder & Director, Alpha Zegus, the increase in smartphone production in the country will bring down smartphone costs drastically – and that’s a big win for the gaming industry.
“More advanced smartphone tech will be available at accessible pricing, which means gaming will eventually no longer be restricted by hardware capabilities. Really looking forward to this being massively adopted,” he added.
“Modifications to the TDS limit will impact the Real Money Gaming (RMG) industry more than the e-sports industry. Since esports games majorly do not have a system of ‘money withdrawal’, TDS does not impact them. As for the RMG industry, the removal of TDS threshold is a bit debatable. Most forms of income in India are considered under the Rs.10000 TDS threshold. If we consider ‘winnings’ as ‘income’, then the threshold should remain the same,” Agarwal explained.
