Online gaming companies in India have reportedly been served with show-cause notices to the tune of ₹1 lakh crore, adding to the sector’s troubles with regulation in recent times.

What Happened: The government has issued show cause notices amounting to a staggering ₹1 lakh crore to online gaming firms, Moneycontrol reported, citing sources. However, the report did not disclose the specific companies affected or the reasons behind the move.

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The online gaming industry in India has been facing increased regulatory scrutiny, with the government bringing down the hammer heavily on games that involve real money. The effect of these show-cause notices on the Indian online gaming industry could be severe.

Why It Matters: The Indian online gaming industry, which witnessed a significant boom during the pandemic lockdowns, has recently come under the scanner of regulatory bodies.

The government and online gaming firms are sparring over the payment of a newly imposed 28% goods and services tax (GST) up to October 1, instead of the previous 18%. While online gaming firms say the 28% tax is applicable only starting October 1, the government contends that the October 1 revision only provided clarity to a law that was already in force.

The GST Council, in August 2023, amended the law to clarify that all online games involving bets, irrespective of skill or chance, would attract a GST rate of 28% on the full value of bets placed from October 1.

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