BENGALURU: After the Mobile Premier League (MPL) laid off 50% or about 350 people due to 28% GST on online real-money games, Hike’s Rush Gaming Universe (RGU) has now reduced its workforce by 22% or 55 people.
Of 55 people, which it has let go of, 24 are not full-timers. Hike founder and CEO Kavin Bharti Mittal said in a statement, “Business is in its best shape ever. This 400% rise in GST is a bazooka pointed at us. We’ll need to absorb some of it.”
As per Tracxn report, Hike has so far raised $261 million in equity funding and its investors include Tencent, Tiger Global Management, Binny Bansal, Cred founder Kunal Shah and Tribe Capital, among others. It pivoted to real-money gaming in 2021.
Recently, in a written reply in Rajya Sabha, finance minister Nirmala Sitharaman said 28% GST on full face value of supplies in casinos, race courses and online gaming will result in higher revenues.
Due to 28% GST, small-size gaming start-up Quizy announced it will shut down the business. “The introduction of a 28% GST rate on entry fees further compounded our woes and murdered the industry finally.
We had always strived to strike a balance between generating revenue for the government and providing an enjoyable experience for our players. However, an abrupt rise in GST rate would have placed an undue tax burden on the industry, affecting not just our profitability but also overall gaming ecosystem,” co-founder Sachin Yadav, Quizy said in a LinkedIn post.
He asked policymakers and industry stakeholders to engage in dialogue and collaboration to strike a balance that supports innovation, economic growth, and responsible gaming. Early this week, industry body All India Gaming Federation (AIGF) said it believes the decision by the GST Council of valuation on deposits will severely impact the sector and result in a situation where a majority of players, including MSMEs will no longer be able to survive in the face of increased tax liability of 400-500%.