Show Cause Notices To Online Gaming Firms As Per Legal Provisions, Ready To Implement 28% GST From October 1: CBIC Chief

The GST Council in its meeting in July announced a 28 per cent tax on online gaming, casinos, and horse racing, without differentiating between games of skill and chance

After a number of online gaming firms received GST evasion notices in recent months, the head of Central Board of Indirect Taxes and Customs (CBIC) Sanjay Kumar Agarwal on Thursday said show cause notices being issued are as per legal provisions and tax demand is based on analysis of data. Most recently, last week casino operator Delta Corp was served a show cause notice for alleged short payment of taxes worth Rs 16,800 crore. 

The GST Council in its meeting in July announced a 28 per cent tax on online gaming, casinos, and horse racing, without differentiating between games of skill and chance. Later in August the decision was approved with a date for implementation of October 1. Last month, parliament passed amendments to the Central GST and Integrated GST laws to give effect to the Council's decision.

"The show cause notice which is going is as per legal provision... The department is taking a uniform stand in the interpretation of the law and accordingly show cause notices are being issued," Agarwal told reporters, reported PTI.  When asked about the quantum of taxes that are due from these online gaming companies, he said, "It is very difficult for me to say there are many companies. Data is being collected and wherever the data is received, the department has issued show cause notice".

He further said that the GST provision is fully prepared to be implemented from October 1. 

"We are fully prepared to bring it (amended provision of online gaming) into effect from October 1. As per the decision taken in the last meeting of the GST council, the related notifications are under process. It is necessary for all states to pass the law or come out with an ordinance... by September 30," the CBIC chief said. Further, Agarwal said that the GST Council in its last meeting had decided that the clarificatory amendments in GST laws with regard to online gaming would be implemented from October 1.

Notably, even though the amendments have been passed by Parliament, the finance ministry is yet to notify the appointed date for implementation of these clarificatory amendments. Also, some states have yet to pass amendments to their state GST laws. As per the PTI report, about a dozen states have passed the amendments in their assemblies, while a similar number of states are understood to have brought in an ordinance to pave the way for implementation of the changes from October 1.

"If there is a requirement (for notification), it will be fulfilled," Agarwal said, as per the news agency. 

Dozen Online Real-Money Gaming Companies Slapped With Rs 55 Cr Tax Notices

Around 12 online real money gaming companies are facing pre-show cause notices from the Directorate General of GST Intelligence (DGGI) regarding their tax liabilities amounting to Rs 55,000 crore, reported the Economic Times, earlier this week. The list of companies includes Dream11, casino operator Delta Corp, Head Digital Works, and Play Games 24*7 

The gaming firms have received show cause notices from taxmen for non-payment of GST at 28 per cent on the full face value of bets placed on their platform.

In September last year, the Karnataka High Court quashed a show cause notice issued to online gaming company Gameskraft for recovery of Rs 21,000 crore GST. The revenue department filed a Special Leave Petition in the Supreme Court, which is next scheduled to be heard on October 10.