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Additional Solicitor General N Venkataraman, representing the GST department, argued that letting the notices run their course could harm revenue interests.
The Directorate General of GST Intelligence (DGGI) has raised a tax demand of ₹1.12 lakh crore against 71 online gaming companies. With penalties, this demand could increase to ₹2.3 lakh crore.
The tax notices are based on an August 2023 amendment to the Central Goods and Services Tax (CGST) Act, which introduced a 28% tax on the “full face value” of entry amounts in online gaming. The amendment was applied retrospectively in 2017, leading to the disputed notices.
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By December 2023, online gaming firms faced 71 show-cause notices for allegedly evading GST worth ₹1.12 lakh crore during 2022–2023 and early 2023–2024. The retrospective tax, applied to bets placed between August 2017 and October 1, 2023, has left the industry reeling.
Gameskraft Technology received the largest GST demand in September 2022, alleging unpaid taxes of ₹21,000 crore on a betting volume of ₹77,000 crore. Authorities accused the company of promoting online betting through platforms like Rummy Culture and Gamezy, claiming its activities constituted taxable actionable claims.
In May 2023, the Karnataka High Court quashed a ₹21,000 crore tax notice issued to Gameskraft, a prominent gaming company. However, in September 2023, the Supreme Court upheld the High Court’s order, reviving the issue.
Anuraag Saxena, CEO of the E-Gaming Federation, welcomed the SC relief, calling it a “win-win” for operators and the government. He expressed optimism about a progressive resolution that could boost investments, employment, and valuations in the gaming sector. Saxena emphasised the importance of such resolutions for strengthening investor confidence in emerging markets.
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