One Year After GST Hike
The online gaming industry in India has absorbed the impact of the 28% GST levy on goods and services, but companies and consumers are still hoping for a review of the tax rate.
Deepak Gullapalli, Founder and CEO of A23, a skill gaming platform, explained that while the company collects GST from customers, the burden ultimately falls on the company. "We collect GST from the consumers but the burden of GST is borne by the company on behalf of the customers," he said. "The amount collected is given back in the form of cashback and consumers don't feel any pain." However, he highlighted that this impacts the company's margins.
"Profitability has taken a hit over the last one year," Gullapalli said. "We are trying to innovate around more engagement, better efficiency of our marketing spends, which will result in improved profitability." He added that the company's margins have fallen from 25-30% to almost flat.
Gullapalli expressed hope that the government and GST Council will consider a review of the tax rate once they see the filings by online gaming companies with the Registrar of Companies. "We are writing to the government, our federations are working on it," he said.
A23 recently announced the launch of A23 Rummy Maha Mela, a 100-day online rummy event starting from October 5th and continuing till January 12th. Gullapalli expects a surge in acquisitions and customer engagement during this period.
He also emphasized the company's commitment to responsible gaming. "It is a very integral part of our culture, we promote it, we track customer behavior," he said. "We predict consumer behavior at an early stage, we warn customers, we have self-exclusion. Even through the federations, we have a very strong code of conduct." He added that the industry has regulated self-regulation.
Gullapalli expressed hope that the government would consider whitelisting legitimate gaming operations and apps, which would benefit both the companies and the customers.