28% GST on online gaming, casinos, horse racing likely to be reviewed in next fiscal year

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The delay in bringing about amendments to the various states’ GST laws and its subsequent implementation is likely to shift the review of the new 28% GST rate on online gaming, casinos and horse racing to the next fiscal year.

People aware of the matter revealed the online gaming companies are likely to approach the courts regarding the tax notices handed to them by the Director General of GST Intelligence (DGGI).

The officials stated that the decision to levy 28% GST on full face value was more of a clarification on the ambiguity that was there in the past regarding how the aforementioned activities should be taxed. The 50th GST Council meeting decided that the GST rate will be levied on full face value while the 51st meeting finalized the valuation methodology of levying the tax on the initial deposit amount only.

“As per the law, demands have been raised to all those online gaming firms that did not pay GST since 2017. Any kind of betting always attracted the highest GST rate. Naturally, those who did not pay the tax have accumulated dues along with penalties and interest,” one of the officials said as quoted by Hindustan Times.

Right after the Supreme Court issued a stay order on the Karnataka High Court’s decision in the Gameskraft GST show cause notice matter, the GST intelligence started issuing similar notices to other real money gaming firms.

As of now, notices have been served to Dream11 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. Industry experts believe that the tax demand is likely to cross Rs 1 lakh crore.

The GST Council is likely to hold its 52nd meeting on October 7. As per reports, the Council is expected to discuss aspects relating to GST implementation, among others.