MPL to Cut 350 Jobs Due to 28% GST on Online Gaming.

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Mobile Premier League (MPL) is set to undergo a significant workforce reduction, with 350 employees facing layoffs due to the imposition of a 28% Goods and Services Tax (GST) on online gaming businesses. An internal company communication on Tuesday revealed MPL’s determination to weather the tax challenges.

Union Finance Minister Nirmala Sitharaman recently announced that the GST Council will reassess the decision after six months, potentially leading to changes by April 2024. Last month, the GST Council had approved a 28% GST on the total bet value, and amendments to the Central GST law are expected to be introduced in the current monsoon session of Parliament. States will then follow suit by passing amendments in their respective assemblies by October 1.

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MPL’s co-founder, Sai Srinivas, conveyed through an email to employees that the new GST structure, which taxes the entire deposit value instead of Gross Gaming Revenue, could increase their tax obligations by a staggering 350-400%. This abrupt surge necessitated difficult decisions for the company’s sustainability.

Acknowledging that the company’s variable costs are primarily linked to personnel, server, and office infrastructure, Srinivas emphasized the need to reduce these expenses to ensure survival. While the company is already exploring avenues to optimize server and office infrastructure costs, it is compelled to downsize the workforce by approximately 350 employees. Srinivas expressed regret over this decision, acknowledging the emotional impact on colleagues and friends.

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Insiders suggest that nearly half of the workforce could be affected, with the product team anticipated to witness more than 60 job cuts. The source, requesting anonymity as they lack media authorization, revealed this information to Reuters.

The total current employee count remains undisclosed. The gaming platform is supported by Peak XV, formerly known as Sequoia Capital India.

Over 100 gaming companies jointly addressed a letter to the finance ministry, expressing concerns that the new tax regime could stifle foreign investments and jeopardize the $2.5 billion already infused into the sector.

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