As many as 71 Goods and Services Tax (GST) show cause notices amounting to Rs 1.12 trillion have been issued to online gaming companies during FY23 and FY24 (up to October), Minister of State (MoS) for Finance Pankaj Chaurdhary informed the Parliament on Tuesday.
“As these notices are pending adjudication, the respective GST demand is not yet determined under the provisions of CGST Act, 2017,” Chaudhary said.
On October 26, Financial Express had reported that The Directorate General of GST Intelligence (DGGI) is set to issue tax notices to another 20-30 online gaming companies soon, quoting a government source. The source had confirmed that the government has so far raised tax demands of over Rs 1.1 trillion via notices served on 20 firms.
Online gaming firms have raised objections over the payment of 28% GST instead of 18% for the period up to October 1, 2023. Gaming firms argue that the 28% levy over online gaming transactions is applicable only starting October 1, but the government is of the view that the revision of rate was done only to provide clarity to a law that was already in place.
Post the 52nd GST Council meeting in October, Revenue Secretary Sanjay Malhotra had said that the GST-liabilities were already existing by the virtue of entry of betting or gambling in the GST laws, and the notices have been issued based on the law that existed earlier.
Among the major online gaming companies – Dream Sports, the parent company of Dream 11, have reportedly been served a GST liability notice of Rs 25,000 crore.
In September, the Supreme Court had stayed the Karnataka High Court’s ruling, which quashed a GST notice against online gaming company Gameskraft for alleged tax evasion to the tune of Rs 21,000 crore.
Meanwhile, MoS Chaudhary also the Parliament that the total GST evasion detected by central GST officers till October in the current fiscal year was Rs 1.51 trillion, of which Rs 18,541 crore have been recovered. In FY23, GST evasion worth Rs 1.32 trillion was detected, of which Rs 33,226 crore was recovered.