The Union Budget 2023-24 Seeks to Make India a Superpower in Gaming and Esports

India’s Finance Minister Nirmala Seetharaman made a clear distinction between skill-based gaming and luck-based gaming. There is rationalization for the direct taxation for online gaming and the Finance Bill helps legitimize online gaming through the introduction of section 194BA which taxes a player’s net winnings at the end of each financial year. 

With certainty in taxation being brought by the budget announcement, it could boost the growth of the online gaming industry. Industry stakeholders commended the Government of India for taking such a step and shared its thoughts on India becoming a tech superpower in the near future.

Esports Industry Reacts to Union Budget 2023-24

Here’s what the esports industry has to say about the new annual budget for 2023-24. 

Suhas Khullar, Chief Financial Officer of Loco

Khullar feels that India is setting a bold vision of making the country a superpower. He is pleased with the budget and pointed out that there are two important intentions that can drive India forward. 

He said, “ First, the intention to set up 100 labs for developing applications using 5G services has the potential to open up a wide range of prospects for the ecosystem, including esports. Secondly, setting up of centers of excellence under the “Make AI in India and Make AI work for India” vision.”

The introduction of the Pradhan Mantri Kaushal Vikas Yojana 4.0, which will help youngsters in the country develop important skills in coding, AI and other technologies, will also help the gaming and esports industry. 

Khullar envisions that these enhanced digital skills will now support the sector's capacity to grow into a significant employer. “The initiatives on Entity Digilocker, setting up e-courts, and Central Data Processing Centre would improve transparency, and support the 'ease of doing business'. To summarize, the focus on capability building for the technology ecosystem, and improving the 'ease of doing business' will help strengthen India at a foundational level”, he added.

Gaurav Kapoor, Chief Finance Officer, Baazi Games

“We welcome the Amrit Kaal Union Budget 2023 with an optimistic perspective. The new income tax regime will result in stimulating local demand and consumption in the economy. The rise of India’s position from an importer to an exporter of mobile phones in India augurs well for the online gaming sector. Moreover, the announcement of setting up 100 labs for developing 5G services apps for smart classrooms, healthcare, and others will open up a new range of opportunities and potential employment. Simplifying the KYC system process will further help in realizing ‘Digital India’ and will enable a seamless experience for consumers. Lastly, the ‘Make in India’ vision will further get a boost with a focus on “Make AI in India and Make AI work for India”, online gaming companies can develop new AI-based advancements that can provide a first-of-its-kind experience to users.”

Rohit N Jagasia, Founder and CEO of 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  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”, Jagasia added.

Rishabh Bhansali, Co-Founder of FanClash, Asia's Largest Esports Fantasy Platform

“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.”

FanClash is 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

“The expansion of India's gaming business mirrors and contributes to the growth of the mobile phone industry. The number of mobile gamers in India is projected to increase to 650 million by 2025, according to the most recent report from the Internet and Mobile Association of India (IAMAI).”

Agarwal feels that the previous seven to eight years have been instrumental to the relationship of mobiles and gaming in India, with numerous mobile gaming titles being released and gaining popularity among the Indian gaming community. 

“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”, he added. 

Lokesh Suji, Director, Esports Federation of India & Vice President of 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. 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.

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.”

Siddharth Sharma, VP Business Strategy, Head Digital Works

"The inclusion of a specific provision for online gaming under Sec 194B of the Income Tax Act is not only progressive but also a win-win scenario for both the government and the industry. Deducting TDS on net winnings at the end of a financial year will catalyse the growth of this sunrise sector even further and this goes to show that this government has applied itself to solve for the needs of both the gamers and the industry. This is exactly the kind of outlook that India needs from the government in today's digital economy"

Vikash Sureka, Chief Financial Officer, Mobile Premier League (MPL)

“The government in the Finance Bill has made a critical distinction between games of skill and games of chance, classifying them into separate sections. This signals the government’s recognition of the unique nature of each and the need for separate tax policies.”

With the introduction of two new sections—194BA (for TDS of winnings from online games for online intermediaries) and 115BBJ (for computation of taxes for those who earn income from winnings of online games)—the government has cleared ambiguities regarding TDS calculation for online gaming and simplified the process for both companies and users.

The Bill allows TDS to be calculated either at the end of the financial year or at withdrawal, streamlining settlements and returns for users. With this change, users who play multiple games will only have to pay tax at year-end based on their net winnings, eliminating the need to pay tax on notional credit. For companies, the TDS calculation process is simpler, improving compliance. This positive step for the skill-gaming industry has us hopeful for continued government support and guidance.”

There are also plans to bolster the mobile phone industry which also indirectly affects the gaming and esports industry in India. With reduced customs duty and proposed inputs for the mobile phone manufacturing sector, smartphones will become even more accessible to the Indian audience. 

While the budget did not directly address all of the concerns related to the Animation, Visual Effects, Gaming, and Comics (AVGC) sector in India, it still brought significant attention to the importance of gaming in India. India is one of the largest target demographics for gaming companies and promoting homegrown teams, games, and companies will lead to bolstering the country’s economy in the long run.