One year on, 28% GST review remains top of wish list for online gaming companies

One year since the 28% levy of goods and services tax on online gaming, companies and consumers seem to have absorbed the impact of the higher tax rate but a review remains on top of their wish list.

Deepak Gullapalli, Founder and CEO, A23 (Head Digital Works), said that while the company collects GST from customers, the burden is borne by the company. “We collect GST from the consumers but the burden of GST is borne by the company on behalf of the customers. The amount collected is given back in the form of cashback and consumers don’t feel any pain,” he told BT in a recent interaction but highlighted that this impacts the margins of the company.

“Profitability has taken a hit over the last one year. We are trying to innovate around more engagement, better efficiency of our marketing spends, which will result in improved profitability,” he said.

While the company is still in the process of finalising its financials, Gullapalli said that it previously had a 25% to 30% margins but it is now almost flat. “But accounts are yet to be finalised,” he said.

He also expressed hope that GST once the government and the GST Council sees the filings by online gaming companies with the Registrar of Companies, it may consider a review. “We are writing to the government, our federations are working on it,” he said.

A23, which is a skill gaming platform with more than 70 million registered users, has recently announced the launch of A23 Rummy Maha Mela, which is a 100 day long online rummy event, which will start from October 5 and continue till January 12.
Gullapalli said he expects a surge in acquisitions over the next three months and more customer engagement during the 100 day fest.

He also underlined that the company has been undertaking and promoting responsible gaming. “It is a very integral part of our culture, we promote it, we track customer behaviour. We predict consumer behaviour at an early stage, we warn customers, we have self exclusion. Even through the federations, we have a very strong code of conduct,” he said, adding that the industry has regulated self regulation.

He also expressed hope that the government would consider whitelisting of legitimate gaming operations and apps that would also benefit the customer.