'Stop gaming, start building rockets': Shark Tank judge Anupam Mittal after GST Council levies 28% tax on online gaming

Joining the ongoing debate on GST Council's decision to impose a 28 per cent tax on full face value of bets in online gaming, casinos and horse racing, Shaadi.com founder and Shark Tank India judge Anupam Mittal said that entrepreneurs should now build rockets rather gaming companies, or move to tomatoes from cryptocurrencies.

On Tuesday at the 50th meeting of the GST Council, it was decided that the government will levy a 28 per cent GST on online gaming, horse racing, and casinos. Finance Minister Nirmala Sitharaman said the Group of Ministers (GoM) has decided to levy a 28 per cent GST on the full value of online gaming, horse racing and casinos with no distinction between games of skill and chance. 

Reacting on the decision, Mittal tweeted: "Latest lessons -- stop gaming, start building rockets, move money from crypto to tomatoes."

The GST Council has said its decision to levy tax on online gaming was taken after careful consideration and it believed that this will help to regulate the online gaming industry and ensure that it is fair and transparent.

The Council has said the tax on online gaming companies would be imposed without making any differentiation based on whether the games required skill or were based on chance.

The decision to levy GST on online gaming has met with mixed reactions from experts and entrepreneurs.

Earlier, BharatPe co-founder and former Shark Tank India judge Ashneer Grover also hit out at policymakers for imposing such a levy on the segment. Grover also owns Crickpe, which is a fantasy game that allows users to create virtual teams of the best in-form real players and earn points depending upon their actual performance.

Reacting to the development, Grover stated that imposing taxes on online gaming can lead to funds drying up in India.

"You (the government) got billions in from foreign investors as FDI. Celebrated FDI inflow! Now the same investors will apply regulatory risk discount to India and funds will dry up. Not only for online games -- but across sectors. Across startups," he tweeted on Wednesday.

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"Also why judgment on online gaming now? Everyone from Virat Kohli to MS Dhoni to Sourav Ganguly has endorsed online gaming. Why was Indian public/govt/BCCI not outraged by all cricketers endorsing? Why was BCCI allowed to take Dream11 as title the sponsor? Sab Doglapan hai."

Before this, he posted: "India is super fun! Super iconic! Uncles sipping on their drinks, smoke in hand, bragging about how they made their fortunes in land speculation - by putting their cash to good use, planning their next Casino trip to Macau, and passing judgment on online gaming and how it's spoiling the youth".

The All India Gaming Federation (AIGF), which represents companies like Nazara, GamesKraft, Zupee and Winzo, said the decision by the council is unconstitutional, irrational, and egregious. This will limit their ability to invest in new games, impact cash flows as well as business expansion.

"The decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities. This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms," AIGF CEO Roland Landers said.

But a few companies and entrepreneurs have also welcomed the move. Earlier in the day, Nazara Technologies said it is expecting minimal impact of the GST Council's decision on its revenues.

Nazara Technologies operates titles such as Classic Rummy (online rummy) and Halaplay (online fantasy) in the online gaming space.

The e-sports firm said the tax will apply only to the skill-based real money gaming segment of its business, once it is implemented. It said the segment contributed a modest 5.2 per cent to its FY23 revenue.

"With reference to the GST Council’s decision to levy a 28 per cent goods and services tax (GST) on online gaming, Nazara Technologies Limited would like to clarify that this tax, once implemented, will apply only to the skill-based real money gaming segment of our business. The contribution of this segment to our overall consolidated revenues for the financial year FY23 was 5.2 per cent," Nazara told BSE.
"To the extent required, the company will proactively take steps to mitigate any potential impact to this segment of our business, and we anticipate minimal impact to our overall revenues," Nazara Tech said.

Nazara said it remains committed to its growth agenda and will continue to pursue organic and inorganic opportunities across various segments in which it operates.

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