Ashneer Grover, the founder of BharatPe and a former judge on Shark Tank India, has publicly criticized tax authorities for their issuance of pre-show cause notices to approximately 12 online real money gaming companies, citing tax dues amounting to ₹55,000 crore. Grover expressed his dismay on X (formerly Twitter), questioning the rationale behind these tax notices and labelling them as a means of “harassing businessmen.”
What Happened? The Directorate General of GST Intelligence (DGGI) on Tuesday informed companies like Dream11, Head Digital Works, and Play Games 24×7 about their substantial tax dues, potentially reaching up to ₹1 trillion.
The notices followed an increase in GST rates for real money games to 28% on the total bet placed, effective from October 1.
Grover's contention revolves around the concept of ‘retrospective tax,' where he draws parallels between the current scenario and previous instances involving companies like Vodafone. He urged the Ministry of Finance and the Prime Minister to intervene, emphasizing the impact on India's economic goals.
Landmark verdict awaited? The impending decision of the Supreme Court on a related case involving Gameskraft Technology is anticipated to set a precedent for investigations into online gaming. Meanwhile, companies like Delta Corp are also contesting substantial tax notices, challenging the newly clarified rules imposing a tax on user payments to online games, irrespective of the nature of the game.
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This development, despite opposition from several states, reflects a broader consensus among most states, leading to the amendment in the Central GST Act, thus intensifying the ongoing discourse on the balance between taxation and the burgeoning online gaming sector in India.
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