What will be the impact of increase in GST on gaming industry? N Jayakumar answers

economictimes.indiatimes.com:

«Any industry in the world that can operate at 28% that is a question that you need to ask yourself, which industry and here what is happening when two people contribute Rs 100 each, literally instantly Rs 56 is taken away from the pool, there is no business in the world that gives you the ability to pay out Rs 56 on 200 or 28% in minute one and yet be productive or yet be able to operate in any manner, shape or form,» says N Jayakumar, MD, Prime Securities.I am just taking a leaf from what Ashneer Grover actually tweeted saying RIP, he is saying real gaming industry if the government is thinking people will put in 100 to play on 70 pot entry it is game over for the gaming industry. What are your thoughts on the same?I think it is a pretty straightforward thing that earlier on what used to happen just to put this in the context of the current practice was that if two persons, should I say put in Rs 100 each in order to play a game, on their winnings the platform would actually pay out 18% as GST which means that if the platform earned 15% on 200 which was say Rs 30 and on Rs 30 they would end up paying 18% which is 5.4 as GST.

But essentially what has changed now is that GST sought to be imposed on the entire 200 which is Rs 56. Now, take it as a parallel to the broking industry which people understand.

The stockbroking industry has GST, has securities transaction tax, etc, built in and all of these operate at sub-1%, in fact well below the 1% including the brokerage. Any industry in the world that can operate at 28% that is a question that you need to ask yourself, which industry and here what is happening when two people contribute Rs 100 each, literally instantly Rs 56 is taken away from the pool, there is no business