• Notification Date: 09-08-2023
• Notification No: N/A

MPL to lay off 350 Employees after Imposition of 28% GST on Online Gaming

Gaming platform Mobile Premier League will lay off 350 employees as it takes steps to "survive" 28 percent GST imposed on online gaming companies, according to an internal company mail on Tuesday. 

Last week, Union Finance Minister Nirmala Sitharaman said the decision will be reviewed after 6 months of its implementation or April 2024 by the Goods and Services Tax (GST) Council to see if any change in rule is required. 

The GST Council had at its meeting last month decided to levy a 28% GST on full face value of bets placed. The Centre will bring amendments to the Central GST law in the ongoing monsoon session of Parliament, following which states will pass the amendments in their respective assemblies to pave the way for the introduction of changes in the law by October 1. 

MPL co-founder Sai Srinivas in an email to employees said that it was confirmed last week that a 28% GST will be levied on the full deposit value rather than on Gross Gaming Revenue. ''The new rules will increase our tax burden by as much as 350-400%. As a business, one can prepare for a 50% or even a 100% increase, but adjusting to a sudden increase of this magnitude means we need to make some very tough decisions,'' Srinivas said. 

He said that as a digital company, our variable costs predominantly involve people, server and office infrastructure. ''Therefore, we must take steps to bring these expenses down to survive and to ensure that the business remains viable. We have already initiated work on revisiting our server and office infrastructure costs. ''However, despite this, we will still have to reduce our people-related costs. Regrettably, we will have to let go of around 350 of you. This has been a heart-wrenching process because it impacts a lot of our friends and colleagues,'' Srinivas said. 

Half the workforce employed by the company could be laid off, with the product team to be the most affected with more than 60 job cuts, a source familiar with the information told Reuters. The source could not be named as they are not authorised to speak to the media. 

It is not clear how many employees the company currently has. MPL is backed by Peak XV, previously known as Sequoia Capital India. 

More than 100 gaming firms said in a letter to finance ministry that the tax will stifle foreign investment and put $2.5 billion already invested in the sector at risk.