aigf

A note from the CEO

Hi Readers!

Welcome back as the dust finally settles on an eventful two months.

From the GST Council’s unfortunate decision to impose a 28% GST

rate on deposits for online gaming to the passing of India’s data

protection law – the Digital Personal Data Protection Act, 2023- the

past two months will go down as significant milestones in India’s

online gaming history. Our Spotlight section this month looks at the

GST saga in detail to give you a quick overview of what happened!  

We’ve also got updates on the legal challenges to the 2023 Gaming

Amendments to the IT Rules 2021 and the ongoing litigation before

the Madras High Court against the Tamil Nadu Prohibition of Online
Gambling and Regulation of Online Games Act 2022.

Our MVP for the month is Karan Keswani, CEO at Bharatbox -the
Indian neighbourhood of the Sandbox metaverse. Karan is a leading
voice in India’s Web3 sector and shares his views on the role of

emerging technologies in online gaming and the opportunities

attached to it.  

We love hearing from our readers. Share your views on the newsletter

or give us ideas on what more you’d like to see hear on online gaming /
I
in ndia, at relations @aigf.in. 

Game On!
Roland Landers

Match Summary

update Regulatory and policy bytes

P olic y updates
The GST saga concludes (at least for now!): Ending a three-

year saga on GST rates for online gaming, the GST Council in its

50th meeting on 11 July 2023 decided to levy 28% GST on online

gaming. Despite the industry’s collective voice, including a joint

representation by investors to the Prime Minister, warning

against the dire implications of the high tax rate, the GST

Council in its 51st meeting on 2 August reaffirmed its earlier

decision to levy a 28% tax on online gaming. However, this time

the Council clarified that the tax will be levied on the ‘entry

deposit’ made by the users and not on the full value of bets.

While not the outcome the industry wanted, the clarification

provides some relief with a 6-month review of the GST rate also

being assured by the Council. Necessary amendments to the

Central Goods and Services Tax Act and Integrated Goods

and Services Tax Act were subsequently passed by Parliament

in the Monsoon session. Check out our Spotlight section to get

the full download on the GST saga!

Levelling up India’s data protection: India has passed the

much-awaited Digital Personal Data Protection Act, 2023.

Gaming companies will need to examine how gamers’ personal

data is collected, used, stored, and retained. The new law will

impact how gaming companies give gamers information about

the use of their data, including impacting the user interface of

gaming apps (notice). And how companies get gamers’ approval

to use their personal data. The law will also impact gaming

companies’ use of payment providers, cloud services, and other

technology service providers such as analytics tools which may

require tweaks to contractual relationships with these service

providers. Check out this s ummary and we binar by Ikigai Law

to know more about the DPDP Act and this primer to

understand how it is likely to impact the user interface of apps.

-
Self regulation enters overti me: The Ministry of Electronics
and Information Technology (MeitY)’s decision on notifying self-

regulatory bodies (SRB) is still pending. This means that the

amendments (Gaming Amendments) to the Information

Technology (Intermediary Guidelines and Digital Media
Ethics Code) Amendment Rules, 2021 (IT Rules) pertaining to
online gaming have not formally come into effect. The delay

reportedly is the result of reshuffles in MeitY and MeitY's focus

on the data protection law. MeitY has received three

applications for forming SRBs. Rajeev Chandrasekhar, Minister

of State, MeitY had earlier stated that MeitY would study these

applications and take a slow approach since the SRBs would

regulate a ‘critical and sensitive’ industry like online gaming. An

unnamed o fficial noted that the industry is informally working

with the government to determine the structure of S RBs and

enable the formal notification of the S RBs. The industry’s active

engagement underscores its commitment to fostering a secure

and responsible gaming environment for gamers.

Bihar’s gambit: The Bihar police's Economic Offences Unit

asked MeitY to ban over 100 gambling/gaming and loan lending

apps, citing potential threats to the country's financial security.

The action follows several FIRs registered against these apps in

the state. It is being pursued under Section 69A of the

Information Technology Act, 2000 (IT Act), which empowers the
government to issue blocking orders to protect India’s
sovereignty, integrity, state security, friendly foreign relations,

and public order.

Power-play continues: The tussle between the centre and

states on regulating online gaming continues. Rajeev

Chandrasekhar, Minister of State, Meit , clari Y fied that states

have the authority to regulate online gambling, but not online

gaming. Adding that regulating the internet made little sense for

a state government.

Industr y intervenes: Amid various state governments

regulating or indicating regulations for online gaming, industry

associations ma y engage with state governments on the

implementation of the Gaming Amendments.

MI B -
gets power up: The central government has amended its

r ules to bring content providers and online advertisements,

within the Ministry Information and Broadcasting’s (MIB)

of

jurisdiction. Consequently, MIB can create new rules for gaming

content platforms and online ads.  

Advisory no . 5: On 25 August 2023, M IB issued its fifth

advisor y against online gambling and betting ads. Noting the

use of black money and potential money laundering involved in

illegal betting and gambling operations, the M IB warned ad

publishers including online sites and social media companies

that legal action would be taken if such advertisements

continue on their platforms. Earlier, the M IB had issued

advisories declaring the advertisements of these betting

platforms as illegal under the provisions of the Consumer

Protection Act 201 9, Cable TV Network Regulation Act 1995, and

the T I Rules, 2021.
Ta mil Nadu’s gaming authority: On 18 August 2023, the Tamil
Nadu government established the 5-member Tamil Nadu Online

Gaming Authority (TNOGA) for a 5-year term. The TNOGA will be

chaired by Md. Nasimuddin (retired I.A.S). The members are- (a)

M.C. Sarangan (retired I.P.S), (b) C. Chellappan (retired professor,

College of Engineering, Guindy), (c) O. Raveendran (retired

clinical psychologist), and (d) Vijay Karunakaran (founder and

CEO, In-Gage Group). Earlier on 24 April 2023, the Tamil Nadu

government had notified The Tamil Nadu Online Gaming

Authority and Regulation of Online Games Rules, 2023, detailing

the powers, functions, and qualifications of the TNOGA. The

TNOGA is responsible for registering online games in the state of

Tamil Nadu. AIGF has challenged the constitutional validity of

the Tamil Nadu Prohibition of Online Gambling and Regulation of

Online Games Act, 2022 (parent law requiring set up of the

TNOGA), in the Madras High Court. (more on this below)
Glo bal leader in online s k ill ga ming: The Indian Statistical

Institute, Kolkata, ‘Unveiling the has released a study titled

Potential and Scope of the Online Skill Gaming Industry: A Study

with Technology Students and Professionals’ that presents the

tech community’s views on the online skill gaming sector.

Surveying 4 44 6 participants across five southern Indian states,

the study revealed that around 8 4 % of tech practitioners believe

India has the potential to lead the global gaming industry with

7 3% of respondents expressing a strong interest to work in the

sector.  

BGMI is back: After successfully completing its three-month

audit, K rafton has received full approval to operate

Battlegrounds Mobile India (BGMI) from MeitY. BGMI will now be

subject to quarterly assessments to ensure user safety is being

maintained. The approval gains significance as other banned

battle royale games such as Free Fire also look to make a

come back in the country with their own Indian o ffering

becoming available for download from 5 September .

J udicial updates
Ta mil Nadu I F challenged the Tamil
challenge continues: A G

Nadu Prohibition of Online Gambling and Regulation Of Online

Games Act 2022, in April 2023. AIGF and other petitioners

argued that the distinction between games of skill and games of

chance could not be abolished by state governments. And the

central government had already established laws to oversee

online gaming including prohibiting betting and gambling in

such games. As a result, the state government lacked the

authority to independently regulate these matters. The central

government in an a ffidavit has also reiterated this position,

stating that the central government has legislative competence

to regulate matters of online gaming, and not state

governments. On 14 August 2023, the Tamil Nadu government

responded by arguing that there were di fferences between

physical and virtual rummy and noted the absence of petitions

filed by gamers to contest the law. Gaming companies then

contended that a game cannot be fferentiated merely

di

because it is played online instead of offline. Oral arguments

have concluded in the case and the Tamil Nadu government has

till 13 September 2023 to file its written submissions

A new pla yer in the ga me: The Delhi High Court recentl y
admitted a P IL challenging the constitutional and legislative

validity of the Gaming Amendments. The P IL has been filed by

the NG O Social Organisation for Creating Humanity (SOCH). The

Petitioners argued that there should be a balance between

e ffective control and e ffective mechanisms for such regulatory

measures. They added that there is no clarity on whether the

centre or state laws should be followed for online gaming. Meit Y

opposed the admission of the P IL and sought time to file a note
on its objections. The petition is now listed on 21 September

2023.

Fair pla y in ads: z

Win o, an online gaming platform, initiated

legal action against Google in the Delhi High Court, seeking an

injunction against the display of rival businesses ' ads through

Google s ' Universal Advertising Campaign (UAC). The injunction

is still pending with the case listed on 20 November 2023 for

further hearing.

Let the co mmittee report on ru mmy: The Supreme Court

dismissed the Andhra Pradesh government’s challenge to an

interim order passed by the Andhra Pradesh High Court calling

for a committee to examine whether rummy is a game of skill or

chance. The Andhra Pradesh government’s primary opposition

was to the High Court’s observations stating that if rummy was a

game of skill, it could not be banned by the government. The

Supreme Court noted that in light of the 2023 Gaming

Amendments to the IT Rules, the High Court should look at the

matter afresh once the committee has submitted its report. The

Supreme Court added that if the online gaming companies

succeed in their writ petition in the High Court, the state

government would be given 3 weeks to approach the Supreme

Court with a fresh appeal, till which time the High Court order

would not be given e ffect.

Karnata k a GST order in Ga meskraft challenged: Shortly after
the GST council rea ffirmed its taxation policy for online gaming
in its 51st meeting, the government filed an appeal in the

Supreme Court against the K arnataka High Court’s order

quashing a notice demanding I NR 21,000 crore in unpaid GST

dues from online gaming company Gameskraft. On 6 September

2023, the Supreme Court stayed the operation of the Karnataka

High Court order and permitted Gameskraft and other

respondents including A G I F to file their response to the

government s ' petition. The matter is now listed for

10 October 2023. We explained the Karnataka High Court’s order

in our previous edition available here.

royale
Spotlight
Gaming trends to look out for

T he GST Saga
T imeline f or G ST D ecision

May 2021 June 2022 nov 2022

C 47 ST C . 28% ST.
O
GoM on asinos,

.S N
th G ouncil Meeting GoM GoM reasserts G
Racecourses and
.
nline ent back for
x
report discussed o consensus on
Gaming established further e amination method of calculation

Dec 2022
GoM submits second report

August 2023 JULY 2023

51 ST C ouncil Meeting Rea . ffi 50 ST C .
28% ST 28% ST
st G rms th G ouncil meeting
fi Recommends
.
G , clari es levy on initial deposit G on online
by users and not on full face value gaming at full face value

August 2023
P C ST
2023
arliament passes the G
(A ) B
I ST (A ) B 2023
mendment ill, and the
G mendment ill,

August 2023 OCTOBER 2023 April 2024

P P P 28% ST
C ST I ST B . ST L . ST C .
resident assented the roposed implementation roposed review of G
G and G ills of new G evy levy by G ouncil

Where did it all originate?

The genesis of the GST saga dates back to May 2021, when the

Goods and Services Tax (GST) Council established a Group of

Ministers (GoM) on Casinos, Racecourses, and Online Gaming to

examine the taxation on these three activities. At the time,

online gaming companies paid 18% GST on the platform fees

(Gross Gaming Revenue) they charged to provide their

services. After several delays due to the re-composition of the

'
GoM, the GoM s first report, which centred on the assessment

and taxation of online gaming, likened it to lotteries, deeming

both skill-based and chance-based games to be taxed at the

same rate of 28%. At the 47 th GST Council meeting in June

2022, the initial findings of the GoM report were deliberated, and

further examination of the subject was recommended. The GoM

convened once again in November 2022, reasserting its stance

of a 28% GST rate for online gaming, casinos, and horse racing.

However, consensus remained elusive regarding whether the

tax should be applied solely to the platform fees charged by

online gaming companies or encompass the entire

consideration, including amounts received from participants.

Following several extensions and without being able to come to

a consensus on the calculation method, the GoM finally

s ubmitted its second report to the GST Council in December

2022 for deliberation.

Decisions on the Table

Following the GoM report, the GST Council had two critical

issues to decide for online gaming:

GST Rate: The Council had to deliberate whether online skill-

based games would be subject to GST at the existing 18%

rate, or the higher 28% rate typically applicable to luxury

items, so-called "sin" goods like tobacco, gambling, or non-

essential goods services. /

V al uation: The Council also had to decide whether GST

should be based on Gross Gaming Revenue , which is the

service charge for facilitating gameplay, or Gross Gaming

Value (GGV), encompassing all fees charged by the gaming

platform, including betting amounts and contest entry

charges.

Ind ustry Perspectives

The online gaming industry had called (see here, here and

here) for games of skill to be taxed di fferently from games of

chance (i.e., )
gambling . They pushed for the calculation of GST

based on the GG R. Industry experts argued that higher GST

rates could increase the costs of online gaming, leading to a

decline in gamers. It would adversely impact game development

and innovation, while also causing a reduction in investments.

This, they argued, would impact the money that online gaming

companies have to invest further in the gamer experience,

safety, and quality of the underlying technologies facilitating the

gameplay .

Decisions Made- GST at 28%:(

50th meeting: During its 50th meeting on 11 July 2023, the

GST Council recommended levying a 28% GST on the full-

face value of online games, horse racing, and casinos.

However, clarity as to what the term ‘full face value’ meant

was not provided, leaving many to believe that GST would be

levied on every contest played every time with fully taxed

winnings. Nirmala Sitharaman, Union Finance Minister,

stated that the GST Council’s decision was based on robust

discussions with all members of the Council and its intent

was not to destroy the online gaming sector.

Pub lic backlash: Responding to the decision, a unanimous

c horus from the online gaming industry highlighted the dire

consequences it would have on the sector, especially on

startups. They also highlighted the broader implications of

investments into the sector and cautioned about o ffshore

entities that would profit from this move as users would

switch to their services to avoid high tax rates. K ey players in

the gaming industry, including I F,

A G advocated with the

government and Council to reconsider its decision. Rajeev

Chandrasekhar, MoS, Meit , also weig Y hed in on the matter,

urging the GST Council to reconsider its decision considering

the Gaming Amendments brought in by Meit Y in April 2023.

5 1 st Meeting: Responding to the various calls from

stakeholders, the GST Council called an emergenc y meeting

on 02 August 2023 to review its decision. However, in this

meeting, the GST Council rea ffirmed its earlier decision,

clarifying that the 28% tax would be imposed on the ‘initial

deposit’ made by the users and would not be taxed again if

the winnings were redeployed to play a game. Additionally,

foreign companies o ffering online games in India would also

be liable to pay GST. Failure of any entity to pay GST could

lead to blocking of the service under Section 69A of the IT

Act, 2000. The new tax regime will come into e ff ect from

October 1, 2023, allowing states adequate time for legislative

enactments. Additionally, the council proposed a review of

the tax structure six months after implementation to adapt

and refine its policies based on prevailing market conditions.

Interestingly, the GST Council’s decision on online gaming

was not unanimous with governments of Sikkim and Goa

calling for the GST to be levied on the platform fees, while the

Delhi government called for a fresh examination of the entire

taxation on online gaming.

Amended wit hout disc ussion: To e ffectuate the GST

Council’s recommendations, amendments to the Central

Goods and Service Tax Act and the Integrated Goods and

Services Act were necessary. Considering the application of

the new tax rate from October 2023, the government

introd uced amendment bills to these two acts on the last

day of the Monsoon Session of Parliament. Both bills were

passed in the Lok Sabha and Rajya Sabha without any

discussion or debate. On 18th August 2023, President

Droupadi Murmu gave her assent to the Bills.

What lies ahead?

T he legal process: To implement the new tax regime, all states
will have to amend their GST laws and the rules regarding the

levy will have to be notified by the government. All this must

happen before 1 October 2023, if the Council’s timeline is to be

met.

For industry: The GST Council’s decision to impose a high tax

rate of 28% is a blow to the growing online gaming sector. The

decision fl ies in the face of the government’s existing rhetoric

through the Animation Visual E ffects Gaming and Comics

(AVGC) mission of making India a global gaming hub, and

MeitY’s recognition of the sector through the Gaming

Amendments. However, the Council’s reconsideration of the

calculation method to limit it only to deposits and its decision to

review the tax rate in 6 months gives hope to the resilient

industry. With online gaming still a huge segment in India’s

digital market and the number of users growing constantly, we

are still highly optimistic about the sector. Online gaming

companies will get past the GST speedbump through revamped

business models, greater reliance on technological innovations

and the drive to make India the hub of online gaming in the

future.

M VP
leader C atch e x ’
perts perspectives on online gaming in I
ndia

This month we feature Karan Keswani, a leading voice in

India’s Web3 sector and CEO of BharatBox- the Indian
neighbourhood in the Sandbox metaverse. Karan has worked

across a diverse range of roles in entrepreneurship, business

operations, supply chain, project management,

infrastructure, and corporate finance. In his current avatar as

Managing Director of Brinc, he has led investments in

numerous Web3 startups, including a joint venture with

Sand box to create BharatBox of which he is now the CE O.

K aran joins us to share his thoughts on what emerging

technologies have to offer for the gaming industry,

considerations while using these technologies, and how we

can get more local ndian content in online games. I

Impact of AI on gaming: I A can be used to personali e the z

gaming experience for each player, keeping them engaged and

coming back for more. It can be used to improve the esports

experience by providing real-time analysis of gameplay,

identifying patterns and trends, and providing insights that can

help players improve their skills. A I can also be used to create

more realistic and immersive virtual reality and augmented

reality gaming experiences.

What does Web3 bring to the sector: B lockchain technology

can be used to create a secure and transparent gaming

environment and esports ecosystem, by tracking and recording

all transactions on a distributed ledger. This can help to prevent

fraud and cheating and give players peace of mind that their in-

game assets are safe. The technology can be used to create in-

game economies that are more secure and transparent. This can

be done by using N FTs to represent in-game assets, such as

virtual currency, weapons, and skins. This gives players true

ownership of their in-game assets and allows them to trade

them on decentrali ed marketplaces. z

Building gaming products involving emerging tech: Gaming

companies should ensure that the gaming experience is

seamless and intuitive, with minimal lag and latency. User

interfaces should be easy to navigate, and games should be

optimi ed for di z fferent devices and platforms. Companies should

ensure the safety and well-being of their players and collect and

use player data in a transparent and ethical manner. They should

be mindful of cultural sensitivities when developing games for

I
the ndian market.

Ethical considerations for gaming companies implementing

AI algorithms: Gaming companies should ensure that their AI
algorithms are fair and unbiased. Companies should avoid using

AI algorithms in a manipulative way and make it clear to players

how AI algorithms are being used in their games. They should

have mechanisms in place to address any issues or complaints

raised by players related to A I algorithms. Additionally, they

should take steps to protect players privacy. '

Localizing online games: Emerging technologies like Machine
Learning can be used to identify cultural references and
symbols that may be offensive or inappropriate for certain

audiences. Augmented Reality and Virtual Reality can be used to

z
create locali ed versions of game content, such as by replacing

the background of a game with a local landmark. Natural

Language Processing can be used to translate game content

into multiple languages, as well as to adapt the content to local

dialects and slang. Instances where content adaptation

successfully resonated with regional communities are P UBG

Mobile which was locali ed into over 100 languages, including z
Hindi, Bengali, and Tamil. Additionally, Pok émon Go has been

locali ed z into India by adding local landmarks to the game

world.

“Emerging technologies like Machine

Learning can be used to identify

cultural references and symbols that

may be offensive or inappropriate for

certain audiences. Augmented
Reality and Virtual Reality can be
used to create localized versions of

game content, such as by replacing

the background of a game with a

local landmark. Natural Language

Processing can be used to translate
game content into multiple
languages, as well as to adapt the

content to local dialects and slang.”

Mr. Karan Keswani

CE O, Bharat Box

Side quests

quests Miscellaneous developments, upcoming games, events and

news from the industry

Gaming social networking app Qlan has successfully raised pre-

seed funding to bolster its growth endeavours. The funding will

z
be utili ed to expand its reach and elevate its capabilities in

gamer networking, discovery, and content creation within the

platform.

The revenue of fantasy gaming platforms d uring Indian Premier

League (IPL) cricket matches rose 2 4 % from a year earlier to

over 28 billion rupees ($342 million) with over 61 million users

participating, a report by the Redseer consultancy said.

IIT Delhi, in a recent study, found that there is no difference in

skill level while playing online or offline versions of card games

rummy and poker. In fact, the study found that the long-term

success in online card games is due to player skills and not

simply chance.

South K orean gaming developer K rafton is going to invest an

additional $150 million in India to foster growth and innovation

in the Indian gaming and tech sectors. This round of

investments will see K rafton invest in sectors that complement

gaming such as Esports, multimedia entertainment, content

creation and audio platforms.

Gaming giant Na ara Technologies reportedl z y stated that its

board has approved a proposal to raise INR 750 Cr. The capital

will be raised via qualified institutional placement, preferential

allotment, or a combination of both.

Google’s latest marketplace policy update has opened new ways

to transact blockchain-based digital content within apps and

games on Google Play.

India’s 15-member Esports contingent for the Asian Games 2023

(September 23- October 8) has been announced. Our athletes
will participate in four events- FIFA Online 4, Dota 2, League of

Legends and Street Fighter V: Champion Edition. 

Global Esports has partnered with Adamas, a prominent

company in Esports performance and wellness, to bolster the

out-of-game performance of its Valorant roster that competes

in the coveted VCT Asia Pacific league. 

Madhya Pradesh has received over 4 0,000 registrations for its

Esports championship that will decide admission to the state’s

first online gaming academy. The academy will provide Esports

players with an opportunity and platform to train and hone their

skills as they look to compete professionally in national and

international championships.

Garena and the Uttar Pradesh Government signed an MoU to

promote Esports in Uttar Pradesh. The news report speculate

that this partnership may help Free Fire make a comeback in

India, as Free Fire which is developed by Garena has been

banned in India since February 14, 2023 owing to security

concerns.

Esports enthusiasts can now watch all the action on JioCinema

as K rafton India
OTT platform has partnered with the to

livestream Battlegrounds Mobile India Series (BGIS). 

Skyesports boarded Loco, an independent

Masters CS:G O on

esports and live-streaming platform, as its official broadcasting

partner.

about aigf

The All India Gaming Federation is the apex industry body for

online gaming in India. Being the oldest, largest and the most

diverse industry association for online gaming, AIGF’s

overarching vision is the growth of the Indian online gaming

ecosystem in an open, safe, and accountable manner, and making

online gaming a cornerstone of Digital India. At AIGF we want to

support and push the vision of Create in India and have the Indian

gaming industry compete globally. Find out more about us here.