Mandatory GST Liability for Online Money Gaming Companies Could Reach Rs 45,000 Crore

The Directorate General of GST Intelligence (DGGI) is currently in the process of issuing notices to the online gaming companies. While the industry has paid less than Rs 5,000 crore in GST since 2017, the actual tax liability is believed to exceed Rs 50,000 crore. This also includes offshore gaming companies, which have avoided paying over Rs 12,000 crore in taxes, as well as the Rs 21,000 crore demand issued to Gameskraft.

Recent amendments to the Central Goods and Services Tax (CGST) have provided clarity on the GST liability of online gaming companies, establishing a universal 28% rate for all such companies. This amendment has led to the Centre filing a special leave petition in the Supreme Court, appealing against the Karnataka High Court’s decision to dismiss the tax demand imposed on Gameskraft by the DGGI.

Previously, there had been an ongoing debate regarding whether online gaming should be categorized as games of chance or games of skill, with the former attracting a 28% GST rate. Some online gaming companies argued that their services were games of skill and should therefore be subject to an 18% tax rate. However, the GST Council has made it clear through amendments to the GST laws that there will be no distinction between the two, and a 28% tax rate will be applied to the full-face value of bets.

It is important to note that the industry has requested that the changes not be applied retroactively.

 

Source - https://gameishard.gg/news/money-e-gaming-companies-face-rs-45000-crore-tax-demand/25868/