Online Gaming Company Gameskraft Filed Rs 21,000 Crore GST Announcement – The New Indian Express

Express News Service

NEW DELHI: In what could be one of the largest indirect tax claims, the GST Intelligence Wing has sent a show cause notice (SCN) of R21,000 crore to Bengaluru-based online gaming company Gameskraft Technology. According to the GST department, the company has been given a notice for allegedly indulging in betting and gambling, and accordingly the company is liable to pay a GST of 28% on the ‘face value’ of collections made.

The R21,000 crore notice to Gameskraft has been received despite the fact that the GST Council, the authority that makes all GST-related decisions, has yet to make a final decision on whether online games are a game of skill or a game of chance.

Game industry sources told TNIE that a subpoena was previously served on Gameskraft in this regard, and the same has been adjourned by the Karnataka High Court on September 23. Meanwhile, a Gameskraft spokesperson has called the notification a departure from the country’s established law. “Games of skill are a constitutionally protected activity according to the Supreme Court and several Supreme Courts across the country,” the spokesperson said.

The statement read: “We are confident that we will be able to respond to this notification to the full satisfaction of the authorities as they have attempted to apply a 28% tax applicable to games of chance and lotteries, rather than the 18% that applies to online skill games platforms.” The online gaming industry has strongly insisted that online games are games of skill and should not be treated as gambling or betting GST on betting and gambling is levied at 28%.

The online gaming industry has argued that since online games are skill-based games, the applicable tax rate should be 18%. Tax experts say the action against Gameskraft is a major blow to the gaming industry as it would lead to much more tax demands. “Such high tax requirements will also allow officers to initiate other proceedings related to property seizure and prosecution. This would impact the entire industry, allowing us to see a pan-India ripple effect across hundreds of online gaming companies,” said Rajat Mohan, partner at the accounting firm AMRG & Associates.

Anita Rstogi, director of Price Waterhouse & Co, says the other aspect (in the Gamescraft case) that deserves attention is valuation, i.e. GST to be levied on the face value or net worth. The industry has also opposed the GST being levied on the aggregate pool and not on gross gambling revenues (GGR).

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