The Central Board of Indirect Taxes and Customs (CBIC) has assessed the pending GST liabilities of such companies at about this level since the 2017 rollout of the levy as they paid 18% on gross gaming revenue, being games of skill, instead of the 28% prescribed in the law, officials said. The differential taxation between games of skill and chance has come to an end.
“Our internal assessment says that the gaming industry alone has paid ₹45,000 crore less tax since the implementation of GST,” a senior official from CBIC told ET.
The Directorate General of GST Intelligence (DGGI) is in the process of issuing notices to these companies.
The online gaming industry, which is dominated by real money gaming companies to the extent of about 77%, has paid less than ₹5,000 crore GST since 2017, while the actual tax liability is pegged at over ₹50,000 crore. This also includes offshore gaming companies where the evasion is over ₹12,000 crore as well as the ₹21,000 crore demand raised on Gameskraft.
CGST amendment clears the air
The Centre filed a special leave petition in the Supreme Court earlier this month appealing against the Karnataka High Court decision quashing the tax demand notice of the DGGI imposed on Gameskraft.
“The latest CGST amendment has made the position very clear in terms of the GST liability of online gaming companies,” said the official cited above. “Every online money gaming company will attract 28% GST and has to pay the balance tax.”
There has been a continuing debate over whether online gaming should be games of chance or games of skill, with the former attracting GST at 28%. A few online gaming companies argued that their services were not games of chance and hence not liable to 28% but 18% tax rate. The GST Council on July 11 decided to amend the GST laws to make it clear that no distinction would be made between the two and that 28% would be imposed on the full face value of bets.
Parliament on Friday approved amendments to the CGST and IGST laws that will enable the changes made by the council.
The industry has asked that the changes not be applied retrospectively.
