Union Budget 2023: Gaming and Esports industry laud the easing of tax burden but awaits more clarity

The players from the gaming and esports sector have praised the government’s move of focussing on Artificial Intelligence (AI), 5G and digital services, amongst other announcements which were made during the Union Budget presentation by Finance Minister Nirmala Sitharaman.

Lokesh Suji

Sharing his viewpoint on the budget, Lokesh Suji, Director, Esports Federation of India and Vice-President, Asian Esports Federation (AESF), said, “As stated by Finance Minister Nirmala Sitharaman in today's Budget, mobile phone production in India has seen a significant rise in the past few years and that has undoubtedly been a game-changer for the Esports industry in the country.”

Contributing extensively to propelling the industry to new 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, in his opinion.

“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 Esports sector in the coming years. As we are still awaiting clarity on the taxability for Esports, we are hopeful that the decisions will be in favour of the community and impact it positively,” he stated.

Gaurav Kapoor

Meanwhile, Gaurav Kapoor, Chief Finance Officer, Baazi Games, added, “The new income tax regime will result in stimulating local demand and consumption in the economy. The rise of India’s position from an importer to an exporter of mobile phones in India augurs well for the online gaming sector. Moreover, the announcement of setting up 100 labs for developing 5G services apps for smart classrooms, healthcare, and others will open up a new range of opportunities and potential employment.”

He also went on to add that the simplification of the KYC system process under the new budget will further help in realising the goal of ‘Digital India’ and will enable a seamless experience for consumers.

“The ‘Make in India’ vision will further get a boost with a focus on ‘Make AI in India and Make AI work for India’, online gaming companies can develop new AI-based advancements that can provide a first-of-its-kind experience to users,” Kapoor said.

Suhas Khullar

According to Suhas Khullar, CFO, Loco, the Union Budget for 2023–2024 is ‘commendable’ for setting the bold vision of making India a tech superpower.

“Two initiatives focusing on capability building for the tech ecosystem stand out. First, the intention to set up 100 labs for developing applications using 5G services has the potential to open up a wide range of prospects for the ecosystem, including esports. Secondly, setting up of Centres of Excellence for AI under the ‘Make AI in India and Make AI work for India’ vision, along with the introduction of Pradhan Mantri Kaushal Vikas Yojana 4.0, which will help young people in developing the necessary expertise in coding, artificial intelligence, and other technologies. These enhanced digital skills will now support the sector's capacity to grow,” he added.

Khullar also went on to state that the initiatives on DigiLocker, setting up e-courts, and Central Data Processing Centre would improve transparency, and support the 'ease of doing business'. “The focus on capability building for the technology ecosystem, and improving the 'ease of doing business' will help strengthen India at a foundational level,” he added.

Bharat Patel

As per Bharat Patel, Chairman and Director, Yudiz Solutions, considering how fast India's economy is adapting to modern technologies, the budget surely emphasises the 'Amrit Kaal'.

“We at Yudiz are particularly thrilled that the government has recognised the potential of the gaming industry and has taken steps in this budget towards fairer recognition of incomes from gaming. It is a positive move that the government has clarified that taxes will be applicable on net winnings, and not on aggregate winnings,” he said.

Furthermore, Patel also went on to add, “We’re also grateful that Hon’ble Finance Minister FM Nirmala Sitharaman has said that the government will issue more clarity on the taxability of online gaming and ease the tax burden. Proactive measures such as these can unleash the brimming gaming potential of India.”

Apurv Modi

Similarly, Apurv Modi, Managing Director and Co-Founder, ATechnos Groupis, also expressed happiness with India’s first Amrit Kaal Budget inspired by 'Saptarishi' or the seven great sages, which to him seems to be a ‘progressive’ one.

“The government plans to set up three Centres of Excellence for Artificial Intelligence (AI)’ in top educational institutions for realising the vision of Make AI in India, for India. Moreover, 100 labs for developing applications using 5G services will be setup in engineering institutions is a very promising announcement for the tech start-up space in general and gaming in particular,” he stated.

Modi also went on to state that with the government proposal of removing the TDS threshold of Rs. 10,000 for online gaming start-ups, these start-ups should provide for TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year.

“We look forward to the taxation rate for the gaming sector as it is yet to be decided. For now, an 18% tax is being levied on the commission collected by online gaming platforms for games not involving betting or gambling, whereas it is zero for the contest entry fees. However, with the government's support and the right policies, the gaming industry could become the driving force of the economy in India and help create jobs for millions of people," he opined.

Suraj Chokani

In the views of Suraj Chokani, Founder, Ability Games, too, the Union Budget 2023 is an excellent budget from every aspect wherein the Finance Minister spoke about seven major thrusts or ‘Saptarishi’ out of which the sixth pointer mentioned new-age technologies.

“Recognising such new age tech in itself is a big boost to the industry as a whole and shows the forward-looking character of the Government. Focus on MSME and start-ups is also a welcome step from our perspective and will help us go a long way. Overall, we are very happy and satisfied with such an inclusive Budget,” he said.

Furthermore, Chokani also went on to point out that globally the AVGC industry was valued at $168 billion in 2021, while the Indian AVGC industry was valued at $1.1 billion, a 28% growth over the previous year, according a report by the AVGC task force.

“The sector has plenty of room for growth, and the government’s recent decisions such as the proposed self-regulation of the online gaming industry and appointment of MeITY as the nodal Ministry will help boost the sector’s growth,” he added.

As per Rishabh Bhansali, Co-Founder, FanClash, the enormous upsurge in mobile phone production has been the impetus for the boom of the Esports industry in India.

“Pocket friendly smartphones have taken gaming and fantasy Esports 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.

Moreover, he also went on to add that he is looking forward to the golden days that are in store for fantasy Esports and gaming in the country.

Rohit N Jagasia

Rohit N Jagasia, Founder and CEO, Revenant Esports, also opined, “Even though the Budget announcement didn’t specifically bring out the matters of concern related to AVGC sector or the esports segment to be precise, we are glad that attention is given to bring in development that would positively impact our sector.”

“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 esports sector. Affordable mobile devices and the increasing accessibility of gaming platforms have also contributed to the growing popularity of esports in India. This is expected to further drive the growth of the Indian esports industry in the coming years,” he added.

Furthermore, Jagasiya also stated that the gaming player is looking forward to the progress of 100 labs for apps development using 5G services that will be set up in engineering institutions as hopefully this could be the beginning of the 5G era in India.

“The announcement of removing minimum threshold of Rs 10,000 for TDS on online gaming and providing clarity on taxability is a big step forward, however most esports 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,” he said.

Rohit Agarwal

Striking a similar tone, Rohit Agarwal, Founder and Director, Alpha Zegus, also said that the modifications to the TDS limit will impact the Real Money Gaming industry more than the Esports 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 is considered under the Rs 10,000 TDS threshold. If we consider 'winnings' as 'income', then the threshold should remain the same,” he opined.

Furthermore, Agarwal also went on to add that an increase in smartphone production in the country will bring down smartphone costs drastically and stated that it is 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 for this to be massively adopted,” he added.

Animesh Agarwal

Animesh Agarwal, Founder and CEO, 8bit Creatives also stated that the expansion of India's gaming business mirrors and contributes to the growth of the mobile phone industry.

“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 the same have all contributed to an increase in the number of Indians adopting mobile gaming,” he said.

Agarwal also went on to add that 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.

He also pointed out that from launching gaming-specific devices such as One Plus Nord, ASUS ROG gaming phones, etc., to hosting multiple events and tournaments for the community, to working with gamers to build a community of mobile gamers, etc., mobile device giants such as One Plus, ASUS, Samsung, etc. are also investing heavily in the gaming industry in India,

“Indian Gaming has the potential to provide a significant boost to the electronics industry as a whole, spanning consoles, PCs, VR gadgets, mobile devices, wearables, IT accessories, and so on. It will be fascinating to observe the next growth surge of gaming in India and how it contributes to and parallels the rise of the electronics industry,” he opined.

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