Tax dept to renew action against 40 gaming companies after GST Council decision

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The Goods and Services Tax (GST) authorities are set to initiate fresh tax demand notices against 40 online gaming companies, according to a report by Economic Times. This follows the GST Council on Tuesday approving a flat 28% levy on online gaming alongside casinos and horseracing. On Wednesday, we were the first to report on the renewed action by the indirect tax department.

Immediately after the Council meet, the Revenue Secretary in a press meet said the decision is only clarificatory in nature and the department will pursue cases against the gaming companies in courts.

The fresh notices could add up to Rs 10,000 crore. Reportedly, the authorities had been awaiting clarity from the GST Council on taxing online gaming companies.

“We have delayed filing a petition in the Gameskraft case as we were waiting for the council’s decision and once the amendment is done we will move the Supreme Court,” a senior official was quoted by Economic Times.

The GST Council’s decision stipulates that all online gaming will attract the top GST rate, whether based on skill or chance, sparking widespread condemnation by the industry. As of date, the same is a proposal and can be implemented only when necessary amendments are made to the GST Act.

Government is expected to file an appeal against the decision of Karnataka High Court in GamesKraft matter. Further, the matters related to Witzeal and Probo could be taken up on priority.

Finance Minister Nirmala Sithartaxaman on Tuesday said the intent was not to end any industry linked to online gaming, casinos and horse-racing, but there was discussion on the moral question of whether these should be taxed at the same rate as essential items.

Online gaming companies, however, said the decision will negatively impact the industry as it will affect gaming volumes and viability of gaming companies going forward resulting in job losses.

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