New Delhi, August 8: Homegrown online gaming platform Mobile Premier League (MPL) is reportedly slashing 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.

According to a TechCrunch report on Tuesday, the Bengaluru-based startup initially announced its plans to cut jobs to employees last week. It later "sent a formal communication" to affected employees. "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. GST: 28% Tax on Face Value in Casinos, Online Gaming, Horse Racing Will Increase Revenue Collection, Says FM Nirmala Sitharaman.

MPL has Peak XV, Times Internet, MSA Novo, Crown Capital, Composite Capital and Moore Strategic Ventures among its investors. MPL, one of the most valued gaming platforms, had registered losses to the tune of about $149.3 million in FY22, from $48.3 million in FY21 -- a three times surge.

Founded in 2018, MPL hosts hundreds of millions of tournaments a month and is trusted by over 90 million registered users across India, Indonesia, Europe, and the US.

The layoffs at MPL 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. Most of the fatalities will be concentrated in MSMEs and startups that house new age business models, according to them.

In a joint statement, the Federation of Indian Fantasy Sports and E-Gaming Federation had said that the new tax framework, while clarifying and resolving uncertainty, will lead to a very burdensome 350 per cent increase in GST and set the Indian online gaming industry back several years. GST on Online Gaming: 28% Tax Likely on Online Gaming, Casinos From October 1.

The GST Council has also decided to review the decisions on the rate of tax and valuation after six months of implementation of the amendments, giving some hope to the industry.

(The above story first appeared on LatestLY on Aug 08, 2023 08:40 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).