Union Budget 2023: ESPORTS

The Tech Panda asked the esports sector what it thinks of the Union Budget 2023 policies for the industry.

The expansion of India’s gaming business reflects and promotes to the growth of the mobile phone industry. The number of mobile gamers in India is expected to rise to 650 million by 2025, as per a recent report from the Internet and Mobile Association of India (IAMAI).

The last seven to eight years have been instrumental to the relationship of mobiles and gaming in India, with several mobile gaming titles released and becoming popular among the Indian gaming community.

After esports has been officially recognized as part of “multisports event” category in India under the Ministry of Youth Affairs and Sports, the Union Budget 2023 presented by Finance minister Nirmala Sitharaman also added to the support.

The government has announced amendments to sections 194B and 115BB of the Income Tax Act 1961 and specified that tax deducted at source (TDS) will be calculated on the net winning amount (at the time of withdrawal) and will allow for the offset of losses. The minimum threshold limit of Rs 10,000 for calculating the TDS has also been removed. Two new sections in the Income Tax Act were added – 194BA for TDS on winnings from online games for online intermediaries and 115BBJ for computation of taxes for those who earn income from such winnings.

Ranganath Tannir, Secretary General, Think Change Forum, said, “We applaud the Finance Minister for taking a progressive stance on online gaming sector. More than the positive financial impact for players of online games, this is a bold step towards destigmatizing and normalizing online skill games industry by unbundling it from betting or gambling activities. We hope that this momentum would be sustained by all other arms of the Government, particularly the GST council and online skill based games will continue get a separate treatment”.

Read more: Union Budget 2023 wish list: ESPORTS

According to a report by Pahle India Foundation, the sunrise online gaming industry has multiple challenges including perception, lack of proper definition, presence of fly by night operators, constant problem of clubbing games of skill with games of chance and gambling, and money laundering apprehensions.

Its advice is that the structure or approach to regulation should include a statutory regulator or Gaming Commission responsible for granting licenses, setting standards, rules and guidelines, and conducting compliance audits that regulate the everyday functioning of the sector.

Also Self-Regulatory Organizations to set standards for their members. Dr. Rajiv Kumar, Chairman, Pahle India Foundation & Former Vice Chairman of NITI Aayog said, “Setting up a regulatory regime is the most prudent choice for enabling the growth of this sunrise sector. Good regulation for any industry is determined by the balancing of responsibilities between policymaker, industry and end consumers. The regulatory framework for new age sectors like OSG should be a light-touch regulatory one that is a combination of principles, rules and self- regulation.”

HIGHLIGHTS

• Mobile phone production in India increased from 5.8 crore units valued at Rs 18,900 crore in 2014-15 to Rs 31 crore units, valued at Rs 2 lakh 75,000 crore in the last financial year.
• 100 labs for developing apps using 5G services will be set up in engineering institutions.
• Removing minimum threshold of Rs 10,000 for TDS on online gaming and providing clarity on taxability.

The Tech Panda asked the esports sector what it thinks of the Union Budget 2023 policies for the industry.

Rohit N Jagasia, Founder & CEO, Revenant Esports

“Even though the Budget announcement didn’t specifically bring out the matters of concern related to AVGC sector or the esports segment to be precise, we are glad that attention is given to bring in development that would positively impact our sector. The increased mobile phone production in India will directly impact on the growing interest in mobile gaming. India is a growing market for mobile gamers which will shape the Indian esports sector. Affordable mobile device and the increasing accessibility of gaming platforms have also contributed to the growing popularity of esports in India. This is expected to further drive the growth of the Indian esports industry in the coming years.

The announcement of removing minimum threshold of Rs 10,000 for TDS on online gaming and providing clarity on taxability is a big step forward, however most esports games, like ours, don’t have any money withdrawing system so these are applicable for the online gaming sectors which are into Real Money Gaming

“We are also looking forward to the progress of 100 labs for apps development using 5G services will be set up in engineering institutions. Hopefully this could be the beginning of the 5G era in India. The announcement of removing minimum threshold of Rs 10,000 for TDS on online gaming and providing clarity on taxability is a big step forward, however most esports games, like ours, don’t have any money withdrawing system so these are applicable for the online gaming sectors which are into Real Money Gaming.”

Rishabh Bhansali, Co-founder, FanClash

“The enormous upsurge in mobile phone production has been the impetus for the boom of the Esports industry in India. Pocket friendly smartphones have taken gaming and fantasy Esports to every corner of the country and a further decrease in its prices as the government proposes to reduce customs duty on import of certain inputs for mobile phone manufacturing will boost the sector’s growth like never before.

Pocket friendly smartphones have taken gaming and fantasy Esports to every corner of the country and a further decrease in its prices as the government proposes to reduce customs duty on import of certain inputs for mobile phone manufacturing will boost the sector’s growth like never before

“We are extremely delighted with the propositions made in today’s budget and looking forward to the golden days that are in store for fantasy Esports and gaming in the country.”

Animesh Agarwal, Founder & CEO, 8bit Creatives

“Developer dedication to expanding mobile gaming in India and the advent of different employment opportunities through mobile gaming have all contributed to an increase in the number of Indians adopting mobile gaming. This has also contributed to the growth of the mobile device sector, as professional gamers frequently seek to upgrade their devices as they progress in their career. Even casual gamers seek better devices in their gaming journey. Interdependence of the industries is also reflected in the commitment of the mobile device companies towards strengthening their presence in the gaming community through dedicated efforts and investments.

It will be fascinating to observe the next growth surge of gaming in India and how it contributes to and parallels the rise of electronics industry

“From launching gaming-specific devices such as One Plus Nord, ASUS ROG gaming phones, etc., to hosting multiple events and tournaments for the community, to working with gamers to build a community of mobile gamers, etc., mobile device giants such as One Plus, ASUS, Samsung, etc. are also investing heavily in the gaming industry in India. Indian Gaming has the potential to provide a significant boost to the electronics industry as a whole, spanning consoles, PCs, VR gadgets, mobile devices, wearables, IT accessories, and so on. It will be fascinating to observe the next growth surge of gaming in India and how it contributes to and parallels the rise of electronics industry.”

Lokesh Suji, Director, Esports Federation of India & Vice President, the Asian Esports Federation (AESF)

“As stated by our honourable finance minister Nirmala Sitaraman in today’s Budget, mobile phone production in India has seen a significant rise in the past few years and that has undoubtedly been a game-changer for the Esports industry in the country. Contributing extensively to propelling the industry to unimaginable heights, the increasing availability of smartphones in India at affordable rates has not only expanded the player base by making gaming more accessible but has also attracted investment from companies, resulting in the development of existing as well as newer games.

With the numbers further upscaling and 5G acting as a catalyst that fuels the industry’s flourishment, we are going to witness monumental growth within the Esports sector in the coming years

“With the numbers further upscaling and 5G acting as a catalyst that fuels the industry’s flourishment, we are going to witness monumental growth within the Esports sector in the coming years. As we are still awaiting clarity on the taxability for Esports, we are hopeful that the decisions will be in favour of the community and impact it positively.”

Rohit Agarwal, Founder & Director, Alpha Zegus

“An increase in smartphone production in our country will bring down smartphone costs drastically – that’s a big win for the gaming industry! More advanced smartphone tech will be available at accessible pricing, which means gaming will eventually no longer be restricted by hardware capabilities. Really looking forward for this to be massively adopted.

More advanced smartphone tech will be available at accessible pricing, which means gaming will eventually no longer be restricted by hardware capabilities

“Modifications to the TDS limit will impact the Real Money Gaming industry more than the Esports industry. Since esports games majorly do not have a system of ‘money withdrawal’, TDS does not impact them. As for the RMG industry, the removal of TDS threshold is a bit debatable. Most forms of income in India is considered under the Rs.10000 TDS threshold. If we consider ‘winnings’ as ‘income’, then the threshold should remain the same.”

Sunil Yadav, CEO, PlayerzPot

“It is rightly said that the Indian economy is on the right path and headed in the right direction. When the economy focuses on providing ample opportunities for citizens, particularly our nation’s youth, who are dedicated, focused, and enthusiastic about their goals, its development will be optimal. We are pleased to learn that the budget has prioritized youth empowerment and the creation of new jobs.

It is a welcome move to define the future of the online gaming industry to remove the minimum threshold of Rs. 10,000 for TDS and to clarify taxability

“It is a welcome move to define the future of the online gaming industry to remove the minimum threshold of Rs. 10,000 for TDS and to clarify taxability. The action will result in transparency, a clear legal identity, and standardized taxation for online gaming. We hope that the government will unquestionably support the sector’s growth and development in the right direction, which will benefit the economy and its stakeholders.”