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MPL cuts half of workforce amidst 28% GST regime for online gaming

Mobile Premier League (MPL)- an online gaming platform is reportedly reducing its workforce by approximately 50%, affecting around 350 jobs. This decision follows the 51st GST Council meeting's decision to uphold a 28% tax on the total value generated from online gaming.

Edited By: Saumya Nigam @snigam04 New Delhi Updated on: August 09, 2023 14:32 IST
MPL
Image Source : MPL MPL

Mobile Premier League (MPL), a prominent homegrown online gaming platform, is reportedly downsizing its workforce by nearly 50%, impacting approximately 350 jobs. This move comes as the 51st GST Council meeting maintained a 28% tax on gross value collected from online gaming, prompting MPL to take measures to address its financial challenges.

The Bengaluru-based startup had initially informed employees about the impending job cuts last week, following which formal communication was sent out. Sai Srinivas, MPL's founder and CEO, explained in an internal email that as a digital company, the primary variable costs involve personnel, server operations, and office infrastructure. The reduction in workforce is deemed necessary for the company's viability and survival.

MPL, valued highly in the gaming sector, faced significant losses of around $149.3 million in FY22, marking a threefold increase from $48.3 million in FY21. The company counts investors like Peak XV, Times Internet, MSA Novo, Crown Capital, Composite Capital, and Moore Strategic Ventures among its backers.

Established in 2018, MPL facilitates numerous monthly tournaments and boasts over 90 million registered users across India, Indonesia, Europe, and the US.

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The layoffs at MPL coincide with the government's persistent imposition of a 28% GST on online gaming. Industry experts argue that this tax approach, targeting GST on deposits instead of the technology platform commissions, will render the business economics unfeasible, particularly affecting MSMEs and startups employing innovative business models.

The Federation of Indian Fantasy Sports and E-Gaming Federation jointly stated that while the revised tax structure seeks to address uncertainties, it burdens the industry with a substantial 350% increase in GST, potentially setting back the Indian online gaming sector for years. The GST Council has, however, indicated a review of tax rates and valuation decisions after six months of implementing these amendments, offering a glimmer of hope for the industry's future.

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Inputs from IANS

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