The GST Intelligence department appears to have decided to crackdown on online real money gaming sector, according to a report by Business Standard.
Earlier this month, the tax department has given an intimation notice to Bengaluru based Gameskraft for a tax demand of Rupees 21,000 crores at 28% on full face value of Rupees 77,000 crores. The move comes at a time the GST GoM headed by Meghalaya CM is expected to submit a revised report on taxation of online gaming, casinos, and horse racing. The GST Council, the apex decision making body for GST is expected to meet next month after multiple delays.
The official sources quoted by Business Standard said the tax authorities are of the view that online gaming companies in India have allegedly conducted massive tax evasion in the past few years.
“The Bengaluru wing of the DGGI has issued show cause notice to online gaming company GamesKraft Technology Private Ltd for an amount of Rs 21,000 crore,” a source was quoted.
By an order dated 23 September the Karnataka High Court has stayed the intimation notice against Gameskraft and proceedings are underway at the court.
The GST department has informed the Court that it is carrying out similar proceedings against the entire online gaming industry in India.
“The department is expecting to recover nearly Rs 2.5 lakh crore in taxes from the online gaming companies,” a source was quoted by Business Standard.
Recently, the Supreme Court also issued notices to skill-based gaming companies and agreed to hear a plea by the Karnataka and Tamil Nadu governments challenging the respective High Court judgments, which struck down provisions of law prohibiting gaming for stakes enacted by respective governments.
News reports cited the company spokesperson as saying the notice was a departure from the well-established law of the land. The company said it has discharged its GST and Income Tax liabilities as per standard industry practice and is confident that it will be able to respond to the notice to the full satisfaction of the authorities.