The GST Council is set to deliberate a significant amendment to the Central Goods and Services Tax (CGST) Act, 2017, which could provide much-needed relief to the online gaming sector by nullifying retrospective tax demands. This potential amendment, proposed by the GST Council's law committee, seeks to address ambiguities in tax interpretations that have led to substantial tax notices for businesses.
According to a report from the Economic Times, the committee has recommended the inclusion of a new Section 11A to the CGST Act. This proposed section would allow the government to forego the recovery of GST that was not levied or was under-levied due to common industry practices or unclear regulations at the time.
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What Will Happen If The Amendment Passes?
The GST Council's upcoming meeting on June 22 will focus on this recommendation. Should it pass, the amendment will allow tax authorities to nullify demands for back taxes, which would be a significant reprieve for the online gaming industry.
However, the amendment does not extend to cases where companies have overpaid their GST. Businesses that have paid more than necessary under previous interpretations will not be eligible for refunds under this new provision.
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Over 6,300 Cases Of Tax Evasion
In the fiscal year 2023-24, the Directorate General of Goods and Services Tax Intelligence (DGGI) uncovered 6,323 instances of tax evasion, totaling Rs 1.98 lakh crore. The online gaming sector alone accounted for over Rs 1 lakh crore of these tax notices, highlighting the sector's significant exposure to retrospective tax demands.
This legislative proposal is considered a crucial move towards offering clearer guidelines and relief to companies dealing with the complexities of the GST framework.