More incentives, tax relief for esports: What gaming community wishes from Budget 2024

The past year has been eventful for the Indian gaming community at large.

Among the many highlights was the government hiking the GST tax slab for real money gaming firms from 18% to 28% on total winnings, which came as a body blow to the industry. Several companies, including prominent players like MPL, had to resort to layoffs to cope with the change. 

On the other hand, esports—a smaller chunk of the gaming industry—saw significant growth. The segment grew to nearly $3.1 billion in FY23, as per a report by Lumikai. It is projected to reach a market size of $7.6 billion in FY28 at a compounded annual growth rate (CAGR) of 25% between FY23 and FY28. 

While clear taxation was part of the wishlist for the sector last year, gaming companies hope this year’s Budget will offer some tax cuts. The industry also seeks greater recognition of esports, and hopes that the Budget will offer a distinction between real-money gaming firms and non-real-money gaming firms. 

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“Firstly, due emphasis on the need for a clear regulatory framework for online gaming and esports is required. The current ambiguity regarding differences between video games and real-money games requires specific regulations,” says Kashyap Reddy, Co-founder and CEO of Hitwicket—a cricket-based esports company. He also expects a greater focus on setting up incubators to promote the development of gaming startups. 

There are also nearly 15 national esports teams that compete in several tournaments like the Asian Games as part of the sports contingent, as per Lumikai’s report.

“The esports industry is growing at an impressive rate and is only forecasted to grow. We hope for fair support and conducive policies from the government in the upcoming Budget to further foster this growth,” says Animesh Agarwal, Founder and CEO of 8Bit Creatives—an esports consulting talent agency, and Co-founder of esports team S8UL.

The esports sector is also hoping for a dedicated allocation of funds, as per Lokesh Suji, Director of the Esports Federation of India (ESFI) and Vice President of the Asian Esports Federation.

“We eagerly anticipate the introduction of incentives for Indian video game development studios that will not only encourage innovation but also enable homegrown titles to prosper within the community,” he notes. 

Perhaps the biggest box on the industry’s wishlist is a tax relief on the winnings made by esports players. Currently, esports winnings attract about 30% income tax on winnings.

“To ensure the long-term success of our esports athletes and attract more aspiring players to pursue careers in esports, we also hope for tax relief for athletes,” said Suji, adding that ESFI is willing to work alongside the government to bring about this change. 

The gaming industry had been excited about the creation of the AVGC (Animation, Visual Effects, Gaming and Comic) Task Force, announced in Union Budget 2022-23, to provide employment opportunities within these segments. This year, it is also expecting government support for promoting more educational programmes.

“We are also hoping that the government's consideration and support in encouraging educational programs by adding esports into educational curriculums and skill development initiatives focused on gaming and esports. This would contribute significantly to nurturing talent within the sector,” says KR Rohith, CEO of Gods Reign, an esports firm based in Bengaluru.

(This story has been updated to correct a factual error.)