The department of indirect taxes is looking into how fantasy gaming companies in India calculate GST and whether the methodology they use results in revenue leakage, the reports Economic Times. Fantasy gaming companies allow users to select a virtual team of real-life players and earn points - and real money - based on the performances of these players in real matches. They collect contributions from players, which go towards a prize pool. From this, the companies deduct 20% as their commission, and most currently pay 18% GST only on this amount. But now, tax authorities looking into whether GST should apply to the total prize pool, the report said. In response, the Indian Federation of Sports Gaming (IFSG), an industry body of eGaming companies that includes Dream11, Fantain, My11Circle and FanFight, reached out to the Ministry of Finance and GST council for clarity on the issue. The report said tax litigation is inevitable if the government provides no clarification. Gaming companies themselves appear divided over the issue. Dream11, which recently turned into a unicorn after receiving more than $1 billion in funding, already pays GST on the entire transaction amount. Its co-founder Harsh Jain told ET: "This is the same practice followed globally in every mature GST-following country. GST for online gaming companies is charged on their Gross Gaming Revenue”. Games of skill or games of chance? Rule 31A of the Central Goods and Services Tax Rules, 2017 states: "The value of supply of actionable claim in the form of chance to…
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