Gst: GST on online gaming: Kavin Bharti Mittal-founded Hike lays off 22% staff

A day after India’s popular online gaming and fantasy sports startup Mobile Premier League reportedly laid off as much as 50% of its workforce, Hike, which owns Rush Gaming Universe, has laid off about 22% of its employees.

According to a report by news agency PTI, about 55 people — which is more than one-fifth of its total workforce — was laid off to absorb the impact of the GST hike on online gaming.
“About 55 people, out of which 24 are non-full-time employees. Closer to 22 percent. Business is in the best shape ever but this 400 percent increase in GST is a bazooka pointed at us. We’ll need to absorb some of it and as a result the reduction in workforce at Hike/Rush,” Hike Founder and CEO Kavin Bharti Mittal was quoted as saying.

Investors in Hike include Tencent, Foxconn, Bharti Group, Tribe Capital, Polygon, Flipkart co-founder Binny Bansal, entrepreneur Bhavin Turakhia and Cred Founder Kunal Shah. The gaming platform is claimed to have 5.2 million monthly active users and distributed over $308 million to winners annually.
While Hike and MPL have laid off some employees, small-size gaming start-ups like Quizy have announced that they will shut shop.
In a memo to employees, Sai Srinivas, founder and chief executive of MPL, said that the new rule will increase the company’s tax burden by 350%-400%.
“Adjusting to a sudden increase of this magnitude means we need to make some very tough decisions … We must take steps to bring these expenses down in order to survive and to ensure that the business remains viable,” Srinivas added in the memo.
Little relief for companies
Last week, after the the GST Council meet, the finance minister said that the 28% taxation will be on the total deposits made for playing online games rather than taxing every individual bet.
The council also announced that it will reevaluate this decision within the next six months. The GST will be imposed starting October 1.