DGGI to finish tax evasion probe involving 12 gaming companies soon

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As per the latest developments, the Directorate General of GST Intelligence (DGGI) is almost done probing into a dozen online gaming companies for tax evasion and would shortly issue show-cause notices to them following the instance of Gameskraft Technologies.

Gameskraft was previously issued the biggest-ever tax notice by the GST Intelligence, amounting to Rs 20,989 crores for the period August 2017 to June 2022. The allegations said that the activities of Gameskraft are of betting and gambling in nature.

The court proceedings are still underway in the Gameskraft case, but reports suggest that other companies currently being investigated will not be shown any restraint while they receive the show-cause notice.

“In other online gaming companies, the department is soon completing their investigation and issuing show cause notice to other companies. Show-cause notices are being sent to 11–12 companies soon. The amount of evasion is yet to be finalized,” said a government official talking to moneycontrol.

GST on Online Gaming, Betting

As of now, the online games have a GST rate of 18% levied on them, while online betting has 28% GST. The GST law is also lacking the proper definition of games of skill and chance. Although, the upcoming GST council meeting might finalize the GST rate.

The report on this matter submitted by the group of ministers (GoM’s) have proposed a 28% GST rate for all online games, be it games of chance or games of skill. While the matter was supposed to be finalized in the previous GST council meeting, the panel failed to reach a consensus.

The online gaming industry has also favoured 28% GST but believes that the amount should be on the Gross Gaming Revenue (GGR) and not on the Entry Amount. An Indian law firm specializing in taxation, Lakshmikumaran & Sridharan (LKS) also did an analysis and reported on why GST in GGR is best for a thriving online gaming industry.