NEW DELHI: States like Delhi and Goa have raised concerns about tax demands on online gaming companies and casinos, claiming that retrospective taxation is being applied. However, Revenue Secretary Sanjay Malhotra has clarified that a 28% Goods and Services Tax (GST) was already being levied on online gaming and casinos prior to these demands.
In the 52nd GST council meeting, Delhi and Goa brought up the issue of tax demands on e-gaming companies and casinos. Delhi Finance Minister Atishi stated that tax notices for the past 6 years, calculated at a higher rate of 28%, are being sent to online gaming companies, even though this rate was only implemented on October 1. This has raised concerns about the impact on the industry, with Atishi highlighting the high tax liability and the negative investment environment for Indian startups.
Malhotra further explained that certain states have raised concerns about online gaming companies facing retrospective GST demand notices for alleged evasion. However, he pointed out that the Directorate General of GST Intelligence (DGGI) is an independent body, and interference in their process is not possible. The chairperson of the GST Council has offered to provide clarifications to the DGGI if needed.
The GST Council had previously decided, in their meetings in July and August, to clarify that a 28% GST is applicable to the full face value of bets placed on online gaming platforms, horse racing, and casinos. These activities were classified as actionable claims, similar to lottery, betting, and gambling, under GST. Amendments to Central GST and Integrated GST laws were approved by Parliament and came into effect on October 1. Most states have also passed amendments to their State GST (SGST) laws.