Gaming, gambling firms sent notices for ₹1 trillion GST dues
- Notices worth ₹1 lakh crore served to Indian online gaming firms by tax authorities
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Online gaming platforms and casinos have been sent show-cause notices to reclaim over ₹1 trillion in goods and services tax (GST), but the recovery of the amount will depend on what the Supreme Court decides on the dispute, a government official said on Wednesday.
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The notices were sent by the end of September.
The official, who spoke on condition of anonymity, said a GST audit of these firms for FY18, the first year of GST implementation, shows short payment of tax which works out to around ₹1 trillion. Some of these notices were bunched up in September because the deadline to serve notices for FY18 was fast approaching.
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“In the case of online gaming, one case has been decided by the Karnataka high court. That matter is before the Supreme Court. They will be deciding on the core issue. The recovery (of the tax demand) will depend on the outcome of court cases," said the official.
The reference was to a dispute between GST authorities and Gameskraft Technologies Pvt. Ltd, which secured a favourable order from the Karnataka high court in May on the levy of 28% GST on online gaming.
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The high court quashed the over- ₹20,000 crore notice issued by the Directorate General of GST Intelligence (DGGI). But the order was stayed by the Supreme Court in September on an appeal filed by the government.
However, tax authorities are unlikely to go for an aggressive recovery drive as they await the Supreme Court decision on 28% GST on online gaming companies, bringing relief to these platforms.
Emails sent to the spokespeople for the finance ministry, Central Board of Excise and Customs and Gameskraft on Wednesday remained unanswered at the time of publishing.
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These show-cause notices for ₹1trillion cited above only concern online gaming firms and casinos.
The official, however, did not give an amount for the overall shortfall in payment of GST by all the businesses, the FY18 GST returns of which have been audited.
Notices post the first audit of GST returns have also gone out to sectors like auto manufacturers and insurance for dues on their tax payments.
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While the levy of 28% GST on online gaming companies, casinos and horse racing clubs is under dispute for the period up to the end of September, the government has amended tax laws to make sure that the highest GST slab applies to entities in these sectors with effect from 1 October.
The GST Council intends to review the implementation of the revamped tax regime at the end of March 2024.
With tax notices going to companies for the first year of the indirect tax reform now, the GST Appellate Tribunal, which has also been created recently, is expected to get a flurry of cases.
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