GST: CBIC Chairman said on the huge tax demand received by e-gaming companies, ‘Notices sent as per legal provisions’

GST: CBIC Chairman said on the huge tax demand received by e-gaming companies, ‘Notices sent as per legal provisions’

CBIC Chairman on Tax Demand Notice: Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Aggarwal said that a show cause notice has been issued to e-gaming companies under legal provisions regarding alleged tax evasion. Have been issued. He said that the tax demand notice is based on the analysis of data. Aggarwal also said that the government is fully ready to implement the amended provisions of mandatory registration of foreign online gaming platforms as well as imposition of 28 percent tax on online gaming, casinos and horse racing from October 1. p style="text-align: justify;">The GST Council, in its meetings in July and August, had approved amendments to the law to include online gaming, casinos and horse racing as taxable action claims. It was also made clear that in case of such supply, 28 percent Goods and Services Tax (GST) will be levied on the entire amount at stake.

CBIC Chairman said, "We are fully prepared to implement the revised provision of online gaming from October 1. As per the decision taken in the last meeting of the GST Council, related notifications are under process. It is necessary for all the states to make a law or bring an ordinance in this regard by 30 September."

Parliament passed amendments to the Central GST and Integrated GST laws last month to give effect to the Council’s decision. Since then, online gaming companies like Dream-11 and casino operator Delta Corp have received show cause notices from the tax authorities for non-payment of 28 per cent GST on the full face value of bets placed through their platform.

Agarwal said, ‘‘The show cause notices being issued are as per the legal provision…the department is adopting a uniform approach in the interpretation of the law. Under the same, show cause notices are being issued.’’ When asked about the amount of tax outstanding on these e-gaming companies, Aggarwal said, ‘‘It is very difficult for me to say anything about this because there are many companies. Data is being collected and wherever data has been received, the department has issued show cause.’’

Since the beginning of GST, 28 percent tax was imposed on online gaming, casino and horse racing. The GST Council had decided that the amended provision to classify these supplies as actionable claims and clarify the taxation provisions will come into effect from October 1. It is proposed to be reviewed after six months, i.e. in April 2024.

Even though the amendments to the Central GST and Integrated GST laws have been passed in the Parliament, the Finance Ministry has not yet notified the due date for implementing these clarificatory amendments. About 12 states have passed the necessary amendments in GST in their assemblies. It is understood that a similar number of states have brought ordinances to implement the changes from October 1. Additionally, some states are yet to pass amendments to the GST law. 

Delta Corp was given a show cause notice last week for short tax payment of Rs 16,800 crore. Online gaming company Gamescraft was given a similar show cause notice in September last year to recover Rs 21,000 crore GST. The company had approached the Karnataka High Court which quashed the show cause notice. Subsequently, in July the Revenue Department filed a special leave petition in the Supreme Court on the Karnataka High Court’s decision in the Gamescraft case. The next date of hearing of the case has been fixed for October 10.

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