Online gaming taxation: Look for a practical way out

livemint.com:

GST demands, which some estimates place at up to ₹1.5 trillion, including penalties for late payment. In fact, the demand made of a single company is more than the total market size! Let us briefly look at the background of the matter.

In a post-Budget talk in 2022, the Prime Minister had emphasized the importance of online gaming, acknowledged its international market and said that India is exploring avenues to increase its footprint in the sector. Realizing the potential of gaming, the government has been forming regulatory mechanisms to facilitate its responsible and sustainable growth, commensurate with our socio-economic and cultural ethos, so as to take care of the problem of addiction, serve consumer interests and curb the proliferation of illegal offshore gambling sites.

Union minister Rajeev Chandrasekhar has also asserted the importance of this burgeoning sector and the need of regulation for its sustainability and growth. Since the implementation of GST in 2017, a landmark move designed to integrate and streamline indirect taxation in India, corporations have enhanced their compliance efforts and budgets to ensure strict adherence with it.

This is reflected in impressive growth in GST collections month after month, for which the tax department must be unreservedly complimented, as also Indian businesses for compliance. GST processes, however, also involved the submission of numerous forms and reports through various online portals.

The gaming industry contends that ever since the advent of the GST regime, tax authorities didn’t raise any objections or concerns when it filed returns with GST at a rate of 18%. On the other hand, the taxation authorities hold that they have an ‘actionable claim’ as the activity