Business is in best shape ever but this 400 per cent increase in GST is a bazooka pointed at us, Hike founder Mittal said in a statement
Published Date – 06:04 PM, Thu – 10 August 23
Business is in best shape ever but this 400 per cent increase in GST is a bazooka pointed at us, Hike founder Mittal said in a statement
New Delhi: After the Mobile Premier League (MPL), gaming startup Hike became the second casualty of the governments 28 per cent GST decision on online gaming, as Kavin Bharti Mittal-founded startup has laid off nearly 55 people.
Mittal said that the 400 per cent increase in GST is a bazooka pointed at us. About 55 people, out of which 24 are non-full time employees. Closer to 22 per cent.
Business is in best shape ever but this 400 per cent increase in GST is a bazooka pointed at us, Mittal said in a statement. We’ll need to absorb some of it and as a result the reduction in workforce at Hike/Rush, he added. Hike operates a Blockchain-based real money gaming platform called Rush Gaming Universe (RGU).
GST is black swan event #2 and it is far bigger than TDS. A 400 per cent Increase in GST is a bazooka pointed at us. While we expect to absorb some of it, we cant absorb all of it. The impact is just too big, Mittal said in an internal email. The gaming platform claims to have more than 5.2 million monthly active users. Earlier, homegrown online gaming platform MPL slashed its workforce by nearly 50 per cent that will impact around 350 jobs, as the 51st GST Council meeting stayed firm on taxing online gaming at 28 per cent on gross value collected.
“As a digital company, our variable costs predominantly involve people, server, and office infrastructure. Therefore, we must take steps to bring these expenses down in order to survive and to ensure that the business remains viable,” wrote Sai Srinivas, founder and chief executive of MPL in an internal email.
The layoffs at gaming startups came as the government stayed firm on taxing online gaming at 28 per cent. Industry players have lamented that taxing GST on deposits rather than the technology platform commission charged by the companies will make the unit economics unviable, wiping out 80 per cent of the industry.
