Online Gaming Companies Face ₹1 Lakh Crore in Show Cause Notices for Tax Evasion

Online Gaming Companies Face ₹1 Lakh Crore in Show Cause Notices for Tax Evasion

VoM News Desk | October 25, 2023 | 12:23 PM IST | Breaking News, Crime | Follow on Google News

Online Gaming Companies Face ₹1 Lakh Crore in Show Cause Notices for Tax Evasion

Online Gaming Companies Face ₹1 Lakh Crore in Show Cause Notices for Tax Evasion: Show Cause Notices Issued

The Goods and Services Tax (GST) authorities in India have taken significant action against online gaming companies by issuing show cause notices worth a staggering ₹1 lakh crore for alleged tax evasion. This development underscores the growing scrutiny of the tax practices of online gaming companies operating in the country.

New Registration Requirement for Overseas Gaming Companies

As part of their efforts to regulate the online gaming sector, the Indian government has amended the GST law, mandating that overseas online gaming companies must register in India starting from October 1. The move aims to bring international gaming companies under the Indian tax regime and ensure fair contributions to the tax system.

28% GST on Bets

In August, the GST Council clarified that a 28 percent Goods and Services Tax (GST) would be applied to the full value of bets placed on online gaming platforms. This tax rate is now applicable to gaming companies, and the show cause notices indicate the government’s intent to enforce these tax regulations rigorously.

Several prominent online gaming companies, including Dream11, and casino operator Delta Corp, received show cause notices in recent months for alleged underpayment of taxes. Additionally, GamesKraft faced a show cause notice in September the previous year, involving an alleged GST evasion of ₹21,000 crore.

Legal Challenges Continue

The legal landscape surrounding these issues is complex. While the Karnataka High Court ruled in favor of GamesKraft, the central government filed a Special Leave Petition (SLP) in the Supreme Court in July. This legal dispute exemplifies the ongoing challenges and debates within the gaming industry regarding tax responsibilities and regulatory compliance.

The substantial amount of show cause notices and the government’s commitment to pursuing tax evasions in the online gaming sector signal a broader effort to maintain financial integrity and compliance in a rapidly evolving industry.

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VoM News Desk

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