Virendra Pandit
New Delhi: Exploiting fanatics of various games and sports, several online gambling companies, claiming to be ‘gaming’ platforms, have cropped up worldwide over the years. In India, they have found valuable ‘customers’ among cricket addicts and enthusiasts and their business runs into billions of rupees across rural and urban areas alike.
This virtual ‘gambling’, also known as gaming, is finally under the scanner of the Centre. The Directorate-General of GST Intelligence (DGGI) has issued Rs. 55,000 crore worth of tax notices to a dozen online real money gaming firms over their tax dues, the media reported on Tuesday.
Dream11, the gaming unicorn that even has celebrities as brand ambassadors, is said to have been served the largest notice for tax dues worth Rs. 25,000 crores.
According to reports, the total quantum of all the notices may touch Rs. 1 trillion.
Such massive taxes could kill a ‘booming industry’, critics said.
The pre-show cause notices were issued after the GST rates for real money games increased to 28 percent on the total bet placed at the entry level, with effect from October 1.
A pre-show cause notice is served before the Income Tax Department issues a show-cause notice to the companies to inform them about the quantum of their tax dues.
In 2022, a Rs 21,000 crore tax notice was slapped on Bengaluru-based online gaming company Gameskraft Technology. This was then the biggest such claim in the history of indirect taxation.
When the Karnataka High Court quashed the notice, the government moved the Supreme Court which will hear the case in the coming weeks, the reports said.
Besides online gaming firms, the DGGI is also booking casino operators who are evading taxes.
Only last week, it slapped on Delta Corp a tax notice for taxes to the tune of Rs 11,139 crore, along with interest and penalty, for allegedly not paying GST on the gross bet value.
Under the new rules, tax will be imposed on the money paid by users to online games, making no distinction between games of skill and chance. And, now, “online money gaming,” includes games based on skill and chance. It is defined as “an offering of a game on the internet or an electronic network, and includes online money gaming.”
In its July meeting, the GST Council, despite dissent from states like Goa, Sikkim, and Delhi, imposed the highest tax without a vote because most states agreed. Parliament also cleared the proposed amendment in the Central GST Act.