Popular online gaming platform Mobile Premier League has laid off 350 employees, according to an internal email sent by the company to its employees. The company has 900 employees as per the LinkedIn profile.
The country's popular gaming platform has cited the 28% GST (goods and services tax) proposed on online gaming platforms from October 1 as the primary reason behind the recent layoffs.
"Last week, it was confirmed that a 28% GST will be levied on the full deposit value rather than on Gross Gaming Revenue. The new rules will increase our tax burden by as much as 350%-400%. As a business, one can prepare for a 50% or even a 100% increase, but adjusting to a sudden increase of this magnitude means we need to make some very tough decisions," says Sai Srinivas in an internal email.
"As a digital company, our variable costs predominantly involve people, servers and office infrastructure. Therefore, we must take steps to bring these expenses down in order to survive to ensure the business remains viable," he adds.
According to the company, June and July were the best months in terms of business performance for the online gaming platform. The company's EBITDA (earnings before income, tax, depreciation and amortisation), turned positive since December, as per the email.
Notably, the finance ministry this month said 28% GST will be levied on the full deposit value of online gaming with effect from October 1. The decision was taken after discussions with several stakeholders in the industry.
"The [GST] Council recommended that the valuation of supply of online gaming and actionable claims in casinos may be done based on the amount paid or payable or payable to or deposited with the supplier by or on behalf of the players excluding the amount entered into the games bets out of the winning of previous games and bets and not on the total value of each bets placed," Finance Minister Nirmala Sitharaman said earlier.
"The Council also recommended to insert a specific provision in IGST Act, 2017 to provide for liability to pay GST on the supply of online money gaming by a supplier located outside India to a person in India, for single registration in India for the said supplier through a simplified registration scheme and also for blocking of access by the public to any information generated, transmitted, received or hosted in any computer resource used for supply of online money gaming by such supplier in case of failure to comply with provisions of registration and payment of tax," she adds.
The decision has caused a furore amongst the domestic online gaming community. The Federation of Indian Fantasy Sports and E-Gaming Federation earlier said the new tax framework will be a setback for the online gaming community.
