On June 22, the Goods and Services Tax (GST) recommended an amendment to the Central Goods and Services Tax (CGST) Act, 2017. This amendment would give the government the authority, based on the GST council’s recommendations, to regularize instances where GST was underpaid or not paid because of common trade practices.
Although the proposal isn’t aimed at any industry, the online gaming industry stands to benefit significantly.
The gaming industry has been suffering from retrospective tax notices, as it has been paying tax on Gross Gaming Revenue, whereas the tax authorities are demanding tax on the full face value of the wagers.
The Supreme Court is set to make a final ruling on this issue in July 2024 after its vacation. We are just one week away from getting our answers.
Even though some are happy, there is concern that even if the Tax authorities in the case, the resulting tax liabilities could far exceed the annual revenues and net worth of the companies involved, making recovery unfeasible.
The skill gaming companies facing these tax notices include Dream Sports (owner of Dream11), Gameskraft, Games24x7, Delta Corp’s Deltatech Gaming, and Head Digital Works (A23 Poker).
Once Parliament and state legislatures pass the amendment, the government is expected to waive the tax dues, providing relief to India’s emerging real money gaming industry.
The sector had also hoped for a review of the 28 percent tax levy that took effect on October 1, 2023. However, the finance minister Nirmala Sitharaman clarified that they did not discuss or include this issue on the agenda.
As reported earlier, the government has no intention of reconsidering the new tax regime, which generates substantial tax revenues for the government.
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