SC seeks Centre's response on 28% GST on online gaming
The Supreme Court has called on the Indian government to address a petition from online gaming companies regarding "retrospective" tax demands totaling Rs. 1.5 lakh crore. Although the court did not issue a stay on the tax notices, a three-judge panel led by Chief Justice DY Chandrachud granted the government and the GST department two weeks to respond. The E-Gaming Federation, Play Games24x7, Head Digital Works, and other gaming start-ups are contesting retrospective goods and services tax (GST) claims.
Origin of the issue
In August 2023, the GST Council amended the law to "clarify" that online games involving bets would be taxed at a 28% rate on the full value of bets placed, and not on the gross gaming revenue. This amendment took effect in October. Gaming firms argue that the 28% tax should only apply from October 1, while the government asserts that the change merely clarified the existing law, making its tax demand non-retrospective.
FM's statement on 28% GST on online gaming
Finance Minister Nirmala Sitharaman recently clarified in the Lok Sabha that the 28% GST on entry-level bets for online gaming platforms would apply prospectively. She stated, "28% is the tax, and as to who it will apply to and on whom the incidence will fall is clearly explained... The valuation rules to exclude winnings are prospective."
GST department's plan to file petition
Meanwhile, the GST department informed the apex court that it plans to file a petition requesting the transfer of all related cases from various high courts to the Supreme Court. In September, the SC stayed a Karnataka High Court ruling that had nullified a GST notice against Bengaluru's Gameskraft Technology over alleged tax evasion totaling Rs. 21,000 crore.
