India’s online gaming market is expected to grow to ₹33,243 crore by FY28, but the real money gaming (RMG) segment will be under pressure in the wake of the 28% GST levy on the industry, according to a new report.
As per the latest report titled ‘New Frontiers: Navigating the Evolving Landscape for Online Gaming in India’ said India has a gaming community of about 42.5 crore gamers, the second largest globally after China. The online gaming market, after growing at a 28% CAGR from FY20-23 to ₹16,428 crore, is projected to maintain a 15% CAGR till FY28.
The RMG sub-segment, a major contributor to the online gaming ecosystem, accounted for 84% of the market share in FY23, featuring over 400 startups.
Despite its dominance, the segment’s revenue share is expected to decrease to 75.4% by FY28, mainly due to the recent GST amendments. Industry estimates this sub-segment to generate ₹6,500-6,800 crore in direct taxes and ₹75,000-76,000 crore in indirect taxes (GST) for the exchequer during FY24-28.
The 50th GST Council meeting proposed to hike the tax rate on online gaming to 28%. The final decision, pending a lack of consensus on the valuation base, was deferred to the GST Council’s 51st meeting, where the tax rate hike and valuation changes were finalized.
In FY23, RMG constituted 84% of the total online gaming market, yielding ₹1,700 crore in GST. However, the industry believes with the revised GST rates and valuation methods, annual GST collections could soar by 113% CAGR from the FY23 base to reach an estimated ₹75,000-76,000 crore by FY28.