Around 80 online gaming companies could face tax notices for reported Goods and Services Tax (GST) evasion to the tune of Rs 10,000-12,000 crore.
According to a media report, a GST of 28% has been imposed on the total bet placed at entry level for each gaming session.
The report adds that the gaming firms allegedly avoided paying the 28% rate on their gross gaming revenue, involving betting through real-money gaming.
A Bengaluru-based online gaming company Gameskraft Technology was slapped with a Rs 21,000 crore notice in September last year. The report adds that it was the largest claim in indirect taxation history.
Although the Karnataka High Court quashed the notice, the revenue department challenged it.
“The investigation wing (of the) Directorate General of GST Intelligence (DGGI) is in the process of issuing notices based on fresh estimates to gamers who operate in India and abroad. The new estimates take the total evasion to over Rs 31,000 crore,” an official told the media outlet.
“Notices are being issued for tax demand of Rs 22,000 crore, and the rest is in process,” the official said.
A new rule will be imposed on the money paid by users to online games – it won’t discriminate between games of skill and chance.
The media report mentions that the rule also provides a new definition of online money gaming, which would include games based on both skill and chance.
“There could be a separate notification in this regard, outlining the changes effective from October 1,” the official was quoted as saying.
Although Delhi, Goa, and Sikkim opposed the rule, many states gave it a thumbs up, following which the GST Council in its July meeting imposed the highest tax without a vote.
A comprehensive review of the rule is likely in six months.