Online money gaming platforms, previously identified as skill-based game providers, could be looking at an additional tax liability of approximately ₹45,000 crore.
As per an ET report, the Central Board of Indirect Taxes and Customs (CBIC) has evaluated the outstanding GST dues of these companies since the 2017 introduction of the tax. The assessment reveals that these platforms paid an 18% tax on gross gaming revenue, considering them as games of skill, rather than the 28% stipulated by law. The distinction in taxation between games of skill and chance has now been eliminated.
A senior CBIC official informed ET, “Our internal assessment indicates that the gaming industry has underpaid taxes by about ₹45,000 crore since GST’s implementation.”
The Directorate General of GST Intelligence (DGGI) is gearing up to serve notices to these entities. The online gaming sector, where real money gaming companies hold a dominant 77% share, has remitted less than ₹5,000 crore in GST since 2017. However, the actual tax obligation is estimated to exceed ₹50,000 crore.
See Also: Top 10 Real Money Earning Apps In India
A CBIC official stated, “The recent CGST amendment has clarified the GST obligations of online gaming companies. Every such company will be subject to a 28% GST and must settle the outstanding tax.”
Get Ring The Bell, Benzinga India’s weekly briefing. Designed specifically for investors like you.
The Indian government’s decision to impose a 28% tax on online gaming turnover has been a contentious issue. The recent GST Council’s decision to amend the laws and impose a uniform tax rate has further fueled the debate. Top investors, including Tiger Global, urged the Modi government to reconsider the tax rate, while industry leaders like Ashneer Grover have criticised the move, warning of potential foreign investment decline.
The debate over classifying online gaming as either games of chance or skill has been ongoing. The former attracts a 28% GST. Some online gaming firms contended that their offerings were skill-based games, warranting an 18% tax rate instead of 28%. However, on July 11, the GST Council resolved to amend GST regulations, clarifying that both categories would be taxed at 28% of the total bet value.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.