GST Dept to go after RMG companies for retrospective dues: Revenue Secretary

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Revenue Secretary Sanjay Malhotra on Tuesday said the government will continue to fight the existing cases pertaining to GST demands on online real money gaming companies in courts. “28 per cent tax was always the case in online gaming. Today’s decision is only to clarify it and put an end to that debate,”  he said while addressing a press release alongside Finance Minister after the 50th GST meeting. 

The proposals from Tuesday will take effect only when certain amendments are undertaken to the existing GST Law. But with the department taking a view that the changes are only clarifications of existing law, the department may increase the scrutiny of past transactions of gaming companies to raise fresh tax demands.

The department is fighting some high profile cases in the courts involving real money gaming platforms. An appeal with the Supreme Court against the recent Karnataka High Court decision in GamesKraft case is expected to be filed soon by the government.

The Tuesday’s decision is based on revenue generated from these activities departing from traditional classification of skill vs chance.

Addressing the press meet after the meeting, the Finance Minister said the GST Department will take assistance of Ministry of Electronics and Information Technology (MeiTY) to formulate a list of games that are included or excluded from the proposed GST rates. MeiTY is the nodal ministry for online gaming.

Finance Minister Nirmala Sitharaman said the intent was not to end any industry linked to online gaming, casinos and horse-racing, but there was discussion on the moral question of whether these should be taxed at the same rate as essential items.

Online gaming companies, however, said the decision will negatively impact the industry as it will affect gaming volumes and viability of gaming companies going forward resulting in job losses.