New Delhi: Online gaming companies are facing a substantial crackdown by Goods and Services Tax (GST) authorities, who have issued show-cause notices amounting to Rs 1 trillion due to allegations of tax evasion.
A senior official confirmed this development on Wednesday. It should be noted, however, that there is no available data to indicate that foreign gaming companies have registered in India since October 1, despite the government's amendment to GST laws, which mandated overseas online gaming companies to register in the country.
The key trigger for this significant issuance of notices was the amendment of GST laws, which made it obligatory for foreign online gaming companies to register in India as of October 1.
This move has brought about stringent measures for the taxation of online gaming activities. The GST Council clarified in August that a 28% GST would be imposed on the full value of bets placed on online gaming platforms.
The official said, "Online gaming companies served notices worth about Rs 1 lakh crore by GST authorities so far."
Online gaming platforms such as Dream11 and casino operators like Delta Corp were among the companies that received GST show-cause notices last month due to suspected underpayment of taxes.
Notably, GamesKraft received a show-cause notice in September last year for an alleged GST evasion of Rs 21,000 crore. While the Karnataka High Court ruled in favor of the company, the central government lodged a Special Leave Petition (SLP) in the Supreme Court in July.
The initiative seeks to ensure compliance with the amended GST laws and collect due taxes from online gaming operators.