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Experts in the AVGC industry (animation, visual effects and gaming, comics) praised the Union Budget 2023-24 for its positive impact on the industry. The industry was particularly pleased with measures such as clarifications regarding the applicability TDS only to the “net wins”, at the end or during withdrawal.
Bharat Patel is Chairman and Director of Yudiz Solutions Ltd. He stated, “Considering the rapid pace at which India’s economy adapts to modern technology, the budget surely emphasizes ‘Amrit Kaal,’ mentioned by our Hon. Prime Minister. We at Yudiz are delighted that the government recognizes the potential of the gaming sector and has taken steps to make gaming incomes more fair. The government clarified that taxes would only be applied to net winnings and not aggregate winnings. This is a positive step. We are also grateful to Hon’ble Finance Minister FM Nirmala Sitharaman for stating that the government will provide more clarity about the taxability and tax burden of online gaming. These proactive measures can unlock the immense gaming potential of India .”
Jay Sayta (technology and gaming lawyer) struck a cautious note. He stated that although the measures were appreciated, more clarity was needed regarding the calculation of net wins.
“The budget and Finance Bill 2023 have provided industry with important clarity about the applicability TDS for winnings on online gambling platforms. Mr. Sayta said that it is a positive step that net winnings has been recognized in the Income Tax Act. TDS must be deducted only at the end or withdrawal from an account. The CBDT has yet to clarify the method of calculating net winnings and any set-offs that might be allowed before such net winnings can be calculated. The CBDT will hopefully soon provide guidelines on how net winnings should be calculated .”
These new rules bring equality between offline and online gaming avenues like apps.
Other measures, such as the exclusion of customs duties on imports of crucial smartphone parts like lenses and batteries, will stabilize smartphone prices and allow more Indians to access mobile technology and games. Indirectly, the industry will benefit from the increase in the minimum taxable slab to Rs.5 lakh to R.7 lakh under this new tax regime. This increases the disposable income of consumers.
Experts also applauded the support provided to startups by the National Data Governance Policy, which will allow them to access anonymised data and provide the benefit of carrying forward losses due to changes in shareholdings of start-ups for up to ten years.
Ability Games founder Suraj Chokani said that the budget was excellent in every way. The FM discussed 7 main thrusts of the budget, calling them Saptrishi. Six pointsers were about new-age technology. Recognizing new-age tech is an important step forward for the entire industry and demonstrates the forward-looking nature of the Government. We welcome the focus on MSME and Startups. This will make us a lot more successful. We are happy with this inclusive Budget .”
According to an AVGC taskforce report, the global AVGC market was worth $168 billion by 2021. The Indian AVGC sector was worth $1.1 billion. This represents a 28% increase over the year before. There is plenty of growth potential in the sector. Recent government decisions, such as the self-regulation of online gaming and the appointment of MeITY to the nodal Ministry, will aid the sector’s development.
