Delta Corp stock rises over 4% after minister Rajeev Chandrasekhar's comment on 28% GST on online gaming
Last week, the GST Council imposed a 28 per cent tax on the turnover of online gaming companies, horse racing and casinos. This means that a gamer will have to pay Rs 28 for every Rs 100 spent in an online game.
- Jul 18, 2023,
- Updated Jul 18, 2023 5:44 PM IST
Shares of Delta Corp rose by more than 4 per cent on Tuesday's session after Rajeev Chandrasekhar, Minister of State, Electronics and IT, said that he would approach the GST Council to rethink its decision to impose a 28 per cent tax on the gaming industry, which has a $20 billion enterprise valuation, and generates $2.5 billion in annual revenue.
On Tuesday morning, Delta Corp shares opened at Rs 186.60 apiece and Nazara Technologies shares opened at Rs 683.05. But during the day, Delta Corp shares surged by 4.15 per cent and closed at Rs 190.65.
Nazara Technologies' shares plunged 0.27 per cent and closed at Rs 667.00.
Last week, the GST Council imposed a 28 per cent tax on the turnover of online gaming companies, horse racing and casinos. This means that a gamer will have to pay Rs 28 for every Rs 100 spent in an online game. The game could be based on skill, or luck.
“We are only in the nascent stages of creating a sustainable, permissible online gaming framework. So, we will do that and go back to the GST Council and maybe request their consideration on the new regulatory framework," Chandrasekhar said at an event on Monday.
He added that the GST Council, which was a federal body, had been working on the issue for the past three years while the regulatory framework for online gaming only began in January 2023.
“The GST Council is not the Government of India. The council is represented by all state governments. It is a federal organization. State governments and finance ministers have come together and created a GST framework. That is a consequence of three years of their work. While we may quibble with the findings, we have to recognize the process of creating a framework for online gaming, started in January 2023," Chandrasekhar said on Monday.
The online gaming industry has voiced its dissatisfaction with the GST Council's move as most companies claimed that the high tax will kill the sector. Start-ups have said the decision can increase net taxes for the firms by as much as 1000 per cent.
Soon after the tax was announced, All India Gaming Federation CEO Roland Landers called it a 'disastrous decision' for start-ups, for the ease of doing business, investments, and the online gaming industry in general. Landers also shared a tweet by former BharatPe founder Ashneer Grover who said the high tax will "murder" the industry.
Grover also opposed the move and tweeted: "RIP - Real money gaming industry in India. If the govt is thinking people will put in Rs 100 to play on Rs 72 pot entry (28 per cent Gross GST); and if they win Rs 54 (after platform fees) - they will pay 30 per cent TDS on that - for which they will get a free swimming pool in their living room come the first monsoon - not happening!"
However, only Nazara Technologies said the decision will have a minimal impact on its revenue. The company said the tax will apply only to the skill-based real money gaming segment of its business, once implemented. The category contributed a moderate 5.2 per cent of its FY23 revenue.
A day after the GST Council announced the new tax rates (July 12), shares of Delta Corp hit the 20 per cent lower circuit limit at Rs 197.45. Nazara shares tanked 6 per cent while those of OnMobile Global slumped 5 per cent.
Also read: L&T Tech net profit up 13% in Q1 FY24; revenue jumps 15%
Also read: 28% GST on online gaming: Government unlikely to review decision
Also read: Online gaming companies, associations write to Centre to reassess 28% GST: Report
Shares of Delta Corp rose by more than 4 per cent on Tuesday's session after Rajeev Chandrasekhar, Minister of State, Electronics and IT, said that he would approach the GST Council to rethink its decision to impose a 28 per cent tax on the gaming industry, which has a $20 billion enterprise valuation, and generates $2.5 billion in annual revenue.
On Tuesday morning, Delta Corp shares opened at Rs 186.60 apiece and Nazara Technologies shares opened at Rs 683.05. But during the day, Delta Corp shares surged by 4.15 per cent and closed at Rs 190.65.
Nazara Technologies' shares plunged 0.27 per cent and closed at Rs 667.00.
Last week, the GST Council imposed a 28 per cent tax on the turnover of online gaming companies, horse racing and casinos. This means that a gamer will have to pay Rs 28 for every Rs 100 spent in an online game. The game could be based on skill, or luck.
“We are only in the nascent stages of creating a sustainable, permissible online gaming framework. So, we will do that and go back to the GST Council and maybe request their consideration on the new regulatory framework," Chandrasekhar said at an event on Monday.
He added that the GST Council, which was a federal body, had been working on the issue for the past three years while the regulatory framework for online gaming only began in January 2023.
“The GST Council is not the Government of India. The council is represented by all state governments. It is a federal organization. State governments and finance ministers have come together and created a GST framework. That is a consequence of three years of their work. While we may quibble with the findings, we have to recognize the process of creating a framework for online gaming, started in January 2023," Chandrasekhar said on Monday.
The online gaming industry has voiced its dissatisfaction with the GST Council's move as most companies claimed that the high tax will kill the sector. Start-ups have said the decision can increase net taxes for the firms by as much as 1000 per cent.
Soon after the tax was announced, All India Gaming Federation CEO Roland Landers called it a 'disastrous decision' for start-ups, for the ease of doing business, investments, and the online gaming industry in general. Landers also shared a tweet by former BharatPe founder Ashneer Grover who said the high tax will "murder" the industry.
Grover also opposed the move and tweeted: "RIP - Real money gaming industry in India. If the govt is thinking people will put in Rs 100 to play on Rs 72 pot entry (28 per cent Gross GST); and if they win Rs 54 (after platform fees) - they will pay 30 per cent TDS on that - for which they will get a free swimming pool in their living room come the first monsoon - not happening!"
However, only Nazara Technologies said the decision will have a minimal impact on its revenue. The company said the tax will apply only to the skill-based real money gaming segment of its business, once implemented. The category contributed a moderate 5.2 per cent of its FY23 revenue.
A day after the GST Council announced the new tax rates (July 12), shares of Delta Corp hit the 20 per cent lower circuit limit at Rs 197.45. Nazara shares tanked 6 per cent while those of OnMobile Global slumped 5 per cent.
Also read: L&T Tech net profit up 13% in Q1 FY24; revenue jumps 15%
Also read: 28% GST on online gaming: Government unlikely to review decision
Also read: Online gaming companies, associations write to Centre to reassess 28% GST: Report