Uncertainties in GST law amendments may delay new tax rate on online gaming industry

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By luckyspinpalace

The delay in implementing amendments to the GST laws across various states could push the reconsideration of the new 28% GST rate on online gaming, casinos, and horse racing into the next fiscal year, according to recent reports.

Industry insiders have revealed that in response to recent tax notices from the Director General of GST Intelligence (DGGI), several online gaming companies have already initiated legal proceedings, while others are considering doing so. The decision to levy a 28% GST on the full face value of these operations was designed to clear up any confusion surrounding their taxation.

In its 50th meeting, the GST Council ruled that this rate would apply to the full face value of these services. However, it was later decided in the 51st meeting that only the initial deposit amount would be subject to taxation.

“Demands have been raised against all online gaming companies that have not paid GST since 2017. Betting has always attracted the highest GST rate. As a result, those who failed to pay this tax now owe large sums in back taxes, penalties, and interest,” an official explained.

Following a stay order from the Supreme Court on a decision made by the Karnataka High Court regarding a show-cause notice issued to Gameskraft over their GST payments, similar notices began appearing at other gaming firms. Among those recently served were Dream11 with a bill for Rs 1,221 crore, Delta Corp for Rs 16,822 crore, Play Games24x7 for Rs 20,000 crore, and Head Digital Works for Rs 5,000 crore. The total demand for tax is expected to exceed Rs 1 lakh crores.

The GST Council will convene for its 52nd meeting on October 7. It is anticipated that they will discuss several aspects of GST implementation and other related issues during this session.