The Ministry of Electronics and Information Technology (MeitY) has decided to delay the establishment of Self-Regulatory Bodies (SRBs) for the gaming industry.
According to an ET report, this delay stems from MeitY’s pursuit of alignment and consensus among various ministries, including those of law, finance, and home affairs, before advancing with this pivotal initiative.
The ongoing dialogues among various ministries cover a range of issues. These include the development of the SRB framework, concerns regarding the apparent non-adherence of gaming companies to tax laws, and matters of national security due to the extensive presence of Chinese firms in the gaming industry.
“There is a discussion between the ministries that harmonisation should happen and everybody (should) be on the same platform before we go ahead,” a government official said, as quoted in the report.
Before proceeding with SRBs, MeitY is awaiting clarification from the Finance Ministry.
The recent decision to impose a 28% Goods and Services Tax (GST) on real money gaming companies has added significant strain to the sector.
Moreover, several prominent gaming companies, such as Dreams 11 and Play Games 24×7, have found themselves in a complex situation, having received notices demanding GST dues amounting to a staggering INR 55,000 Cr.
A lot of concerns have been raised over the rationale behind such high-value notices.
This situation has prompted gaming companies like MPL, Spartan Poker, Hike to significantly reduce their workforce. Faced with concerns, several smaller gaming firms such as OWN, Quizy, Fantok have temporarily suspended operations.
Meanwhile, the online gaming companies are likely looking at tax notices of around INR 1 Lakh Cr to be raised by the Directorate General of GST Intelligence (DGGI).
In July, Inc42 reported that four industry bodies of the online gaming sector filed three different applications for the formation of SRBs, and MeitY would take at least three months to finalise the SRBs.
Under the online gaming rules, all online games would be determined as permissible or not by SRBs. The industry can have one or multiple SRBs, as per the rules. Gaming companies would have to be registered under one of the SRBs to offer products/services in India.
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