eGaming companies GST tax demand in line with legal stand: CBIC chief
He said the government was ready to implement the 28% GST regime for online gaming, horse racing and casinos following the GST Council's decision of last month as soon as all states amend their respective laws. The Council will take stock of the tax regime in six months, as decided at its last meeting on August 2, he said.
«The department is taking a uniform stand in the interpretation of law and, accordingly, showcause notices are being issued,» Agarwal told reporters on the sidelines of a Ficci event, adding that all notices were based on internal data analysis.
His comments came in the backdrop of many large online gaming companies — including Delta Corp and Dream11 — receiving tax demand notices running into thousands of crores.
On August 16, ET first reported that the Directorate General of GST Intelligence (DGGI) would send notices to real money gaming (RMG) companies that had hitherto paid tax at a rate of 18% on gross gaming revenue, positioning themselves as platforms of 'games of skill.'
Chance versus Skill
Total tax liability of these gaming companies is seen at about ₹ 55,000 crore. Agarwal declined to give any number on the tax liability, saying that in many cases, state tax authorities had issued notices.
The tax amount claimed includes 100% penalty and interest since August 2017.
The tax department treated online RMG on a par with gambling — liable for levy at 28% on the full face value — but the gaming industry has been paying 18% on gross gaming revenue.
Following a setback in the Gameskraft case, where the Karnataka High Court quashed the Rs 21,000-crore tax demand, the GST Council clarified that online real money gaming would face 28% GST on full face value without distinguishing between
