GST officials serve tax notices worth Rs 1 lakh crore to online gaming companies
A government official to Reuters that the gaming firms have evaded taxes.
In August this year, the GST authority imposed a 28% tax on online gaming companies on the total funds deposited to play online games.
Last week, Delta Corp received a GST notice for short payment of tax to the tune of Rs 6,384 crore, taking the overall tax demand on the company to over Rs 23,000 crore.
Last month, the company was slapped with a show cause notice for alleged short payment of taxes worth Rs 16,800 crore.
A host of other online gaming firms, like Dream11 also received GST show cause notices this month for alleged short payment of taxes.
Separately, a show cause notice was sent to GamesKraft in September last year for alleged GST evasion of Rs 21,000 crore.
GST on online gaming firms
The Finance Ministry notified October 1 as the date for implementation of the amended GST law provisions for taxing e-gaming, casinos, and horse racing.
The GST authority said that amendments to Integrated Goods and Service Tax will make it mandatory for offshore online gaming platforms to register in India and pay taxes in accordance with domestic law.
According to the latest changes to the Central GST Act, online gaming, casinos, and horse racing are now treated as “actionable claims” similar to lottery, betting, and gambling and are subject to 28% GST on the full face value of bets.
Union Minister Rajeev Chandrasekhar recently said that the Artificial Intelligence and online gaming segments can add up to $300 billion dollars to India’s gross domestic product (GDP) by 2026-27.
On concerns raised by the online gaming industry over high taxation, he said the government sees that “permissible and legally acceptable” online gaming as being an important part of opportunities before youngsters.
“However, it has been clear that there are some bad actors in the gaming sector who have misused the internet and that there is absolute justification to crack down on them. The framework for online gaming has been finalised and is gradually being advocated to the rest of the government,” Chandrasekhar said.
