‘Online gaming GST order hits one nation, one tax spirit’
NEW DELHI : Online real-money gaming firms, and lawyers representing multiple companies in this sector, labelled the Centre’s way of implementation of the new goods and services tax (GST) rate on online gaming companies unprecedented. The stakeholders of the sector, which has remained under fire for numerous taxation issues through the year, claimed that the Centre’s notification of the new online gaming GST regime—done before all states have fully adopted it—could be used as a precedent for breaking the “one nation, one tax" format of GST going forward, and is also in contravention of the law.
On 29 September, finance ministry’s revenue department notified new tax rate via an amendment to Central Goods and Services Tax Act, 2017. The amendment comes after 51st GST Council meet, on 2 August, recommended a tax rate of 28% on gross revenue of online gaming firms.
Industry stakeholders, however, are concerned about the notification, with two senior taxation lawyers from top law firms stating that it is “unprecedented" for the Centre to notify an amendment to the central GST regime—before all states complete the adoption of the tax rate. “Most states are likely to pass their respective State GST law amendments for the new GST regime for online gaming in the coming month.
But, the nature of this unilateral interpretation by the Centre raises graver questions on the greater precedent that it sets for overall GST regime. Given that the entire GST framework hinges on the states and the centre exercising their law making powers ‘simultaneously’, this unilateral move by the Centre could potentially lend precedent to states taking unilateral tax decisions too," said Sudipta Bhattacharjee, partner at law firm Khaitan & Co.
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