Tax authorities in India have issued notices amounting to ₹1 trillion to online gaming companies in the country.
Indian GST officials have issued notices totaling ₹1 lakh crore to online gaming companies, as reported by Reuters. A government source informed Reuters that these gaming firms are suspected of avoiding taxes.
In August of this year, the GST authority imposed a 28% tax on online gaming companies, based on the total deposits made to play games online.
Just recently, Delta Corp received a GST notice for underpaying taxes, amounting to ₹6,384 crore. This brings the total tax demand on the company to over ₹23,000 crore. In the previous month, the company was served with a show cause notice for allegedly not paying ₹16,800 crore in taxes.
Several other online gaming companies, including Dream11, also received GST show cause notices this month for alleged underpayment of taxes.
Additionally, in September of last year, GamesKraft received a show cause notice for alleged GST evasion amounting to ₹21,000 crore.
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GST for online gaming companies.
The Finance Ministry has officially announced that starting from October 1, the amended GST law provisions will be in effect for the taxation of e-gaming, casinos, and horse racing.
According to the GST authority, these changes to the Integrated Goods and Service Tax will require offshore online gaming platforms to register in India and adhere to domestic tax laws.
Under the recent adjustments to the Central GST Act, online gaming, casinos, and horse racing are now categorized as “actionable claims,” similar to lottery, betting, and gambling, and are subject to a 28% GST on the entire face value of bets.
Union Minister Rajeev Chandrasekhar has recently stated that the Artificial Intelligence and online gaming sectors have the potential to contribute up to $300 billion to India’s GDP by 2026-27.
Addressing concerns raised by the online gaming industry regarding the high taxation, he emphasized that the government recognizes the importance of legitimate and legally compliant online gaming as an opportunity for young people.
However, Chandrasekhar also acknowledged that there are some unethical actors in the gaming sector who have misused the internet, and he asserted that there is a valid reason to take action against them. He added that the framework for online gaming has been finalized and is gradually being communicated to other government entities.
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