Retrospective GST on e-gaming firms may go
The Centre has proposed to remove the “retrospective” nature of the higher Goods and Services Tax (GST) levy on the online gaming industry, by inserting an enabling provision in the Finance Bill, 2024. The provision seeks to empower the Centre, via an amendment to Section 11A of the Central GST Act, to declare any retrospective levy of GST null and void.
The move signals the Centre’s intent to give relief to the thriving sector, which has been facing a viability crisis, due to a flurry of hefty tax demands. Though the GST laws were amended to jack up the levies only in October, 2023, tax notices with the same interpretations had been issued to e-gaming firms in previous months. According to official data, as many as 71 show-cause notices had been issued to online gaming companies, flagging GST evasion of `1.12 trillion in FY23 and FY24 (till October 2023).
So, the removal of the retrospective validity of the tax would amount to a huge breather for the firms even as the matter is sub-judice. The relevant Finance Bill section says that the government can regularise “non-levy”, or “short-levy”, of GST due to any “general practice prevalent in trade.” Simply put, the government could choose to not collect any tax for any particular period, where in the industry as a whole was interpreting the law in a manner different from what the government intended. While non-levy means no tax is levied, a short-levy is when it isn’t applied as per applicable rates, or intended base.
