New Delhi: One of the most popular Indian online Gaming unicorns MPL is going to lay off about 350 members of its workforce which is about 50% of Its total Indian wage earners.
The shocking decision comes in the wake of a recent decision made by the GST council which seeks to impose a lavish 28% tax on the full deposit value while completely disregarding the nature of the game.
This means that a 28% tax will be charged not on the company’s Gross gaming revenue but on its full deposit value for both the games of chance and skills. Currently, the platforms pay an 18% Goods and service tax as platform fees.
28% GST Way Too Much For MPL?
In an internal email addressed to its employees, MPL’s co-founders Shubh Malhotra and Sai Srinivasan informed that the new rules will spike up the company’s tax burden by a whopping 350-400%.
They further added, ” As a business, we can prepare for a 50% or even 100% increase, but adjusting to a sudden increase of this magnitude means we need to make some very tough decisions.” In the same email, the co-founders also informed that the variable cost involves the employees, servers and infrastructure and although MPL has started to work on revisiting its infrastructure and services, it’s nearly impossible for them not to bring down its people-related cost.
Notably, this is not the first time when the gaming gained has laid off its employees as back in 2022, MPL fired about 100 workers before wrapping up their business in the Indonesian markets.
AIGF Condemns Government’s Decision
Meanwhile, several prominent gaming companies voiced their dissent against the government’s decision of levying a 28% tax on gaming revenue. Condemning the government’s decision, the All India gaming federation labelled it as irrational, hideous and unconstitutional. As per the federation’s spokesperson the hiked GST liability would adversely affect all the MSMEs and startups in the country.
The decision is likely to force several companions to either close down completely or do frequent layoffs from time to time. Now, with MPL already becoming one of the very first unicorn companies to fire its employees as a cost-cutting measure, there are good chances of other major other gaming platform companies doing the same in the near future.
