Online gaming firms have welcomed the budget announcements made by Finance Minister Nirmala Sitharaman on Wednesday. A sector that has been at the forefront of enabling consumer digital adoption has found encouragement in the government's move to rationalise taxes and provide impetus to the local manufacturing of smartphones.

"We applaud the government's significant initiative to rationalise direct taxes in the online gaming sector. The amendment to sections 194B and 115BB of the Income Tax Act 1961 specifying that TDS be calculated on net winnings and thereby allowing offset of losses are steps in the right direction. We now await finer details on the computation mechanism so as to aptly bring the amendment into practice," says Sameer Barde, CEO, E-Gaming Federation.

The government in the Finance Bill has made a critical distinction between games of skill and games of chance, classifying them into separate sections. This signals the government's recognition of the unique nature of each and the need for separate tax policies, says Vikash Sureka, Chief Financial Officer, Mobile Premier League (MPL). The Bill allows TDS to be calculated either at the end of the financial year or at withdrawal, streamlining settlements and returns for users. With this change, users who play multiple games will only have to pay tax at year-end based on their net winnings, eliminating the need to pay tax on notional credit. For companies, the TDS calculation process is simpler, improving compliance. This positive step for the skill-gaming industry has us hopeful for continued government support and guidance, explains Sureka.

The move to give a fillip to local manufacturing of smartphones by proposing relief in customs duty on import of certain related parts and inputs like camera lens is only expected to boost the growth of online gaming. In India, bulk of the games are played on smartphones. The number of mobile gamers in India is projected to increase to 650 million by 2025, according to a report by the Internet and Mobile Association of India (IAMAI). "Pocket-friendly smartphones have taken gaming and fantasy Esports to every corner of the country and a further decrease in its prices as the government proposes to reduce customs duty on import of certain inputs for mobile phone manufacturing will boost the sector's growth like never before," says Rishabh Bhansali, Co-Founder at Esports Fantasy Platform FanClash.

An increase in smartphone production in our country will bring down smartphone costs drastically,that's a big win for the gaming industry, says Rohit Agarwal, Founder & Director, Alpha Zegus, a marketing agency specialising in the domains of gaming & lifestyle. "More advanced smartphone tech will be available at accessible pricing, which means gaming will eventually no longer be restricted by hardware capabilities," says Agarwal.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.