Govt notifies Principal Commissioner, Central Taxes, Bengaluru West as authority to issue GST registrations for offshore gaming firms

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The centre on Friday notified the Principal  Commissioner  of  Central  Tax, Bengaluru  West as appropriate authority to grant registrations to online gaming entities located outside in India but targeting Indian users. The notification will be effective from 1st October 2023.

The government has decided to tax offshore gaming entities and necessary amendments were carried out recently based on the recommendation of the GST Council.

Vide amendments to CGST Act 2017, a new section 14A was inserted to mandate tax payments by offshore gaming firms. The government officials have clarified that taxing the offshore gaming entities does not mean the games offered by the entities are legal.

The specific emphasis on the offshore gaming firms arose from the fact that offshore gaming firms were often found violating the tax laws and been involved in money laundering.

Indian firms including industry body AIGF have represented to the government number of times to control the menace of offshore gaming firms which flout laws and compete with legal compliant gaming entities.

The central government also has notified 1st October as the effective date for implementation of 28% tax regime on full face value despite many states yet to pass necessary amendments.

Further, the authorities have taken a view that the amendments are only clarificatory in nature and the GST since 2017 is 28% on the face value. The tax department recently obtained a stay on the order of Karnataka High Court in the GamesKraft matter and has started issuing notices to online gaming firms and Goa based casino operators.

Unicorn fantasy operator Dream11 has approached the Bombay High Court challenging the tax notice and the validity of certain provisions of the GST Laws.