Jobaaj Stories
In a significant development, online gaming platforms that advertise themselves as offering games of skill could be facing an additional tax liability amounting to a staggering Rs 45,000 crore, as reported by reliable sources. The Central Board of Indirect Taxes and Customs (CBIC) has conducted a comprehensive review of the pending goods and services tax (GST) obligations of these entities since the implementation of GST back in 2017.
It has come to light that these companies, which have been operating under the banner of skill-based games, have been paying an 18% tax on their gross gaming revenue. However, as per the legal mandate, the correct tax rate for games of skill stands at 28%. This discrepancy has led to a considerable gap in tax payments by these entities over the years.
The key question now remains whether these companies will be retroactively subjected to the 28% tax rate from July 1, 2017, or from the more recent date of July 11, 2023, when the taxation disparity between skill-based and chance-based games was finally equalized at 28%. It's worth noting that the authenticity of this report is yet to be independently verified.
An official representative from the CBIC has revealed that the gaming industry as a whole has collectively paid a significantly lower amount of Rs 45,000 crore in taxes than what was expected since the GST was introduced. The Directorate General of GST Intelligence (DGGI) is reportedly gearing up to issue formal notices to the concerned gaming companies in the near future.
It has been observed that the online gaming sector, which is largely dominated by real money gaming entities, has only contributed less than Rs 5,000 crore in GST payments since the inception of GST in 2017. However, estimates suggest that the actual tax liability could well exceed a massive Rs 50,000 crore. This figure encompasses offshore gaming companies that have evaded taxes amounting to over Rs 12,000 crore, along with the substantial Rs 21,000 crore demand served to Gameskraft.
A recent amendment to the Central Goods and Services Tax (CGST) laws has introduced clarity on the taxation front. All online money gaming companies will now be subject to a uniform 28% GST rate, obligating them to fulfill their pending tax liabilities. This amendment effectively eliminates the differentiation between games of skill and those of chance, bringing all forms of online gaming under the same tax regime.
This development underscores a significant shift in the taxation landscape for the online gaming industry, highlighting the need for compliance and adherence to the updated tax regulations.
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