Budget 2025: Gaming industry seeks AI boost, AVGC support & esports tax relief

As the Union Budget is set to be presented on February 1, the gaming brands remain hopeful for policy reforms that will facilitate research and innovation in Artificial Intelligence (AI). 

“Top gaming players are conducting a lot of research and innovation in AI, progressive tech, machine learning, predictive analysis and others. These technologies form the backbone of gaming business and decide the course of the future of the industry. If the government allocates funds for AI research, it would boost the industry. A lot of talent will be diverted towards AI,” leading fantasy sports brands told e4m. 

Rajan Navani, Founder & CEO, JetSynthesys, shared, “We hope to see this sector being addressed from a long-term perspective with further allocations to enable India’s movement from primarily a back-end service provider to the world to actually leading through IP’s, global products. Investing in innovation in new age technologies like Gen AI, AR/VR/XR, Quantum amongst others that will drive the future of the world in this sector.”

To evolve this into a mainstream cultural and economic force the government must prioritise extending incentives for IP creation, reducing TDS rates on digital platforms, introducing tax benefits for esports and video gaming companies, he noted. 

Navani adds, “This budget has the opportunity to unlock the full potential of India’s creative industries including video gaming and esports (which now also has an Esports Olympics) and showcase a roadmap and commitment towards the same to attract long-term global capital into this sector driving economic growth, creating jobs, and establishing India as a global leader in digital entertainment.” 

While the decision on the GST is taken by an independent GST Council and hence any changes in the GST regime are not usually announced in the budget, many players still hope that the government might announce some reforms in tax burden to foster an environment conducive to growth and innovation in the gaming industry. 

In October 2023, the Indian government imposed a 28% Goods and Services Tax (GST) on the online gaming sector, applied retrospectively. This move has significantly impacted the industry's financial landscape, leading to increased tax liabilities and operational challenges. This resulted in the shutdown of many smaller gaming brands and impacted user growth. 

Roland Landers, CEO of the All India Gaming Federation (AIGF), expressed optimism, stating, "We remain hopeful that the government will consider reducing the GST rate and addressing retrospective taxation issues, which would provide much-needed clarity and enable further growth and innovation."

Landers adds, “The gaming industry is also looking forward to increased support for the Animation, Visual Effects, Gaming, and Comics (AVGC) sector. Landers added, "The government's focus on advancing the AVGC sector is promising, and we look forward to increased funding and policy support for this initiative."

Aman Gupta, Vice President of Finance, Witzeal, says, “As we approach the Union Budget, we remain optimistic that the government will address key concerns, including a reduction in the GST rate on skill-based gaming similar to other entertainment services and retrospective taxation issues. These measures would bring much-needed clarity, encouraging innovation and fostering long-term growth.”