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In a major relief to online gaming companies, the Supreme Court (SC) on Friday put a stay on GST show-cause notices amounting to Rs 1.12 lakh crore against these companies. The court has suspended all further proceedings under these notices until the matter is conclusively adjudicated.
An officer from the Directorate General of GST Intelligence (DGGI) headquarters can now send takedown notices to intermediaries to block online money gaming apps and websites that evade Goods and Services Tax (GST) under Section 79(3)(b) of the Information Technology Act, the government said in a notification on Monday.
Laden with tax demands way above their earnings, gaming companies are moving the Supreme Court (SC) to restrain the taxman from precipitating a crisis.
The Indian online gaming industry is at a crossroads as tax authorities gear up to issue final tax demands by February 5, 2025, based on the pending show-cause notices (SCNs). As the deadline nears, many gaming companies have already been served tax notices by authorities. Although gaming firms are waiting for the Supreme Court’s deliberation on the matter, given the timeline, a verdict before February 2025 appears unlikely, according to a report by The Economic Times.
GST on online gaming was a major point of discussion in the GST council, the debates on changes in the rate of tax and value of supply went on for over 2 years and the council finally made a decision in July 2023. The amendments came into effect on October 1, 2023, imposing a 28% tax on total deposits in the online gaming sector, up from the previous 18% tax on platform fees or gross gaming revenue. While this change has led to a dramatic increase in government revenue from online gaming, with monthly GST collections surging from Rs 250 crore to Rs 1,100 crore—a jump of 412%, it has resulted in a steep rise in the tax burden on the online gaming industry—by as much as 350-400%.
The GST Council, chaired by Finance Minister Nirmala Sitharaman, has submitted status reports on several pending matters, from the Group of Ministers (GoM), including rate rationalisation, real estate and online gaming.
The GST Council in its meeting next week is likely to deliberate upon the status report on taxation of online gaming, in addition to the progress of the drive against fake Goods and Services Tax registration, sources said.
The Group of Ministers (GoM) on GST rate rationalisation met on Thursday and largely agreed to maintain the current four-tier tax slab system. The panel has asked tax officers to analyse the impact of adjusting rates on certain items and present their findings to the GST Council.
Before the crucial Goods and Services Tax (GST) council meeting scheduled for September 9th, the reconstituted Group of Ministers on GST for rate rationalisation met for the first time on Thursday.
Two subsidiaries of Nazara Tech have received notices in an ongoing goods and services tax-related matter, totaling Rs 1,120 crore, the online gaming and sports media company said in an exchange filing on July 17.
