71 show cause notices issued to online gaming firms involving GST demand of Rs 1.12 lakh cr: Finance Minis

The show cause notices were issued after the government clarified that online gaming, betting, and gambling will be levied 28% GST on the full face value from October 1. The government believes that some of these firms leveraged the lack of clarity on taxation of game of chance and game of skill before October 1 and there was a need to have a uniform 28% GST on the full value of bets placed on online gaming platforms. The government also amended the GST law making it mandatory for overseas online gaming companies to register in India from October 1.

Online gaming companies have been served show-cause notices to the tune of Rs 1 lakh crore for tax evasion so far, according to a senior official

Monthly GST collections from online gaming companies have surged by over 400% to Rs 1,200 crore since October 1 due to the implementation of a 28% tax on e-gaming platforms. The GST Council clarified last year that online gaming companies must pay 28% GST on the full face value of bets.

FM says 21,791 entities with fake GST registration detected involving Rs 24,010 crore

Experts say there is a need for a clarificatory circular to address past issues that would give the industry a breather

The GST Council had in August clarified that 28 per cent Goods and Services Tax (GST) would be levied on the full value of bets placed on online gaming platforms.

The Central Board of Indirect Taxes and Customs (CBIC) chairman, Sanjay Kumar Agarwal, has stated that the goods and services tax (GST) notices issued to online gaming companies are in accordance with legal provisions and will not be immediately reviewed. The government is prepared to implement the 28% GST regime for online gaming, horse racing, and casinos once all states amend their laws. The CBIC will review the tax regime in six months. Many online gaming companies have received tax demand notices running into thousands of crores, with a total tax liability estimated at around ₹55,000 crore.

Over the last month, several online gaming companies including Dream11, and Gameskraft, have been issued show-cause notices for alleged short payment of taxes.

Online money gaming companies in India may have to pay about ₹45,000 crore ($6 billion) in additional taxes as they may have paid only 18% on gross gaming revenue, being games of skill, instead of the 28% prescribed in law since the rollout of the GST in 2017. According to officials from the Directorate General of GST Intelligence (DGGI), the gaming industry paid ₹45,000 crore less tax and could owe about ₹50,000 crore.

After a long, dark funk, the online gaming industry in India might have something to cheer for, albeit prematurely. The Goods and Services Tax (GST) Council will meet on August 2 to deliberate on legal amendments for the levy of 28% GST on online gaming. This and more in todays ETtech Morning Dispatch.