Online gaming companies have been issued show cause notices worth Rs 1 lakh crore so far by the Goods and Services Tax (GST) authorities for tax evasion and underpayment of taxes, a senior government official said Wednesday. Though the official refused to put a total number to the overall notices issued by GST authorities, he said notices were issued now as the time period for issuing notices for financial year 2017-18 was coming to an end.
“Online gaming companies have been served notices worth about Rs 1 lakh crore by GST authorities so far…for GST evasion, there are so many issues for which show cause notices have been issued. Cases are being investigated. It will be very difficult to attach a figure to the quantum of evasion,” the official said.
The government has amended the GST law, making it mandatory for overseas online gaming companies to register in India from October 1. But there is no data yet of overseas gaming companies registering in India, the official said.
ADVERTISEMENT
In August, the GST Council clarified that 28 per cent Goods and Services Tax (GST) would be levied on the full value of bets placed on online gaming platforms. Since then, many gaming companies have received either an intimation notice or a show cause notice for short payment of GST. Amended legal provisions and rules for online gaming, horse racing and casinos came into effect from October 1, bringing into effect the 28 per cent GST at face value at entry level and mandatory registration for offshore online gaming companies in India. The online gaming companies claim they were paying taxes at the rate of 18 per cent as the games played on the platform were ‘games of skill’.
While gaming company Dream11 had got a show cause notice for evasion of Rs 40,000 crore, casino gaming company Delta Corp received multiple notices from GST authorities totalling Rs 23,204 crore for short-payment of taxes. Delta Corp Ltd has already got orders from the Goa Bench of the Bombay High Court and Sikkim High Court restraining tax authorities from any further action on multiple GST demand notices.
A spate of GST notices have also been issued by authorities beginning from industry-specific investigations in sectors such as banking, insurance that later extended to online gaming and casinos. Subsequently, GST notices expanded to cover “underpayment” of tax, “incorrect availment of input tax credit” and “reconciliations differences” between returns filed and financials. This especially picked up pace before the end of limitation period on September 30 for sending show cause notices for FY 2017-18, which was the first year of the GST regime. Notices have also been sent for subsequent years from FY19 to FY22. The Tax Department has said that cases have been booked using “data analysis aided by advanced technical tools”. In a statement on October 18, DGGI said it detected GST evasion of Rs 1.36 lakh crore so far during FY24 involving voluntary payment of Rs 14,108 crore.