Nazara Technologies said the 28 per cent GST would apply only to the skill-based real money gaming segment of its business, whose share in its FY23 consolidated revenues was 5.2 per cent. 
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Nazara Technologies said the 28 per cent GST would apply only to the skill-based real money gaming segment of its business, whose share in its FY23 consolidated revenues was 5.2 per cent. Shares of Nazara Technologies Ltd (Nazara Tech) plunged 14 per cent in Wednesday's trade even as the company, before market hours, clarified the 28 per cent GST proposed by the GST Council would apply only to the skill-based real money gaming segment of its business, whose share in its FY23 consolidated revenues was 5.2 per cent.
The stock plunged 14.36 per cent to hit a low of Rs 605 on BSE. It later recovered ground and was trading at Rs 666.15, still down 5.71 per cent. 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.
"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 told stock exchanges.
The new tax rate on gross gaming value is an unexpected move by the GST Council, which will have far-reaching consequences for the industry and question its basic viability said Siddharth Sharma, SVP- Business Strategy, Head Digital Works.
"Not only will this burden hinder the growth of this nascent industry, its application will compress new innovation and opportunities. This decision does not take into account the pleas of the industry, global precedents, and even counters the favourable regulatory environment being built up for online gaming in recent months. Businesses have a legitimate concern that this move will push users towards illegitimate betting and gambling operators that don't follow the laws of the land,” he said.
Kishore Kumar, Lead, Indirect Tax at Taxmann said the domestic gaming industry witnessed a remarkable growth in recent times and was growing at a CAGR of 28-30 per cent. But, he said, it is now saddled with the decision taken in the 50th GST Council Meeting with regard to its taxability.
He said India is probably the only country to levy GST on full face value on all categories of online games. The blanket proposal to levy GST on full face value on online gaming will possibly put an end to the sub judice debate of ‘game of skill’ vs ‘game of chance', he said.
The change will bring game of skill at par with wagering contracts, which are in the nature of gambling and betting.
From a revenue perspective, the proposed amendment may significantly contribute to the Government exchequer and will make states like Goa and Sikkim important from revenue generation perspective, Kumar said adding that the change will require host of amendments under the GST law, especially with respect to the definition and taxability of actionable claims under GST.
He said it remains to be seen is whether this change is going to apply prospectively or have a retrospective impact.
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