Tax Notices issued to Online Gaming Companies worth Rs. 1 lakh crore

The Goods and Services Tax (GST) authority imposed a 28 % tax on online gaming companies on the total funds deposited to play online games, in the month of August.

In the previous week, a GST notice was issued for Delta Corp for short payment of tax to the tune of Rs. 6,384 crore, total tax demand on the company exceeds Rs. 23,000 crore.

The company was sent a Show Cause Notice (SCN) for alleged short payment of taxes worth Rs. 16,800 crore in the last month.

A host of Dream 11 (an online gaming firm) also received GST show cause notices this month for alleged short payment of taxes.

Last year in September, a show cause notice was slapped with GamesKraft for alleged GST evasion of ₹21,000 crore.

Goods and Services Tax (GST) on Online Gaming Firm

The Finance Ministry notified that the implementation date of the amended GST law provisions for taxing e-gaming, casinos, and horse racing is October 1.

According to GST officials, amendments to Integrated Goods and Service Tax (IGST) will make it compulsory for offshore online gaming platforms to register in India and pay taxes according to domestic law.

After some of the latest changes in the Central GST Act, online gaming, casinos, and horse racing are now treated as ‘actionable claims’ just like lottery, betting, and gambling and are subject to 28% GST on the overall face value of bets.

Rajeev Chandrasekhar (Union Minister) said that the Artificial Intelligence (AI) and online gaming sections can add up to $300 billion dollars to India’s Gross Domestic Product (GDP) by the period 2026-27. He further added that the online gaming industry raised the concern over high taxation, the government sees ‘permissible and legally acceptable’ online gaming as being an essential part of opportunities before youngsters.

However, there are some bad gamers in the gaming sector who have misused the internet and there is complete justification to crack down on them. Online gaming’s framework has been finalized and is gradually being advocated to the rest of the government.