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GST Intelligence raids RummyCulture parent company, laptops and hard drives seized: Report

The tax raids on Gameskraft offices in Bengaluru come at a time when it is opposing the state’s new gambling law in court.

Goods and Services Tax (GST) raids have allegedly unearthed tax irregularities at Bengaluru-based Gameskraft Technologies, the company which runs games such as RummyCulture and so on, reported India Ahead News.

According to the TV news channel, raids were conducted at 10 properties of the company; and in the raids, several laptops and hard drives were seized by GST sleuths. MediaNama has reached out to GST Intelligence officials and Gameskraft Technologies for comments regarding the matter, and the report will be updated once they respond.

There is ambiguity in the categorisation of online gaming under GST and revenue authorities have taken divergent views on the taxation of online games, according to a Financial Express report which cites research by the All India Gaming Federation (AGF). The report highlighted that the online gaming industry required regulatory certainty on valuation aspects. 

In 2019, MediaNama reported that the Department of Indirect Taxes was looking into how fantasy gaming companies in India calculate GST and whether the methodology they used led to revenue leakage.

Gameskraft recently challenged Karnataka’s online gambling law

In October, multiple gaming companies such as Gameskraft, Mobile Premier League, Games24x7, and others filed petitions against a law passed by the Karnataka state government that outlaws online betting and gambling.

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Besides the ban, the amendment to Karnataka’s Police Act also increases the severity of punishment for people caught gambling:

  • Inclusion of online gaming: The Police Act amendment expands the definition of “gaming” to include online games and games that use “electronic means and virtual currency, electronic transfer of funds in connection with any game of chance. Instruments of gaming also include digital devices, software, and even cyber cafes.
  • Games of skill banned: The amended act bans “any act or risking money, or otherwise on the unknown result of an event including on a game of skill” (emphasis supplied)
  • Fines increased: The amendment increases the fines and prison time to people caught under gambling prohibitions. A maximum term of one year has been made three years, and a Rs 1,000 fine has been increased to Rs 1,00,000. Minimums for these penalties have also been changed from one month to six months and from Rs 500 to Rs 10,000.

Gameskraft also challenged Kerala’s decision to ban rummy

After the Kerala government outlawed online rummy for stakes, Gameskraft Technologies challenged the notification at the Kerala High Court. In a notification dated February 23, the state government amended the Kerala Gaming Act, 1960, to include online rummy involving stakes.

On September 28, the Kerala High Court quashed the notification and said that the notification was “arbitrary” and violated the right to do business guaranteed under Article 19(1)(g) of the Constitution of India.

“The Counsel have placed all their cards on the table. My effort is to arrange them in sets and to declare. If I arrange the cards skilfully and declare [my judgment], then “Rummy is a game of MERE skill”. If I arrange the cards without any skill and still manage to declare, then “Rummy is a game of chance,” Justice TR Ravi wrote in the order.

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Among other subjects, I cover the increasing usage of emerging technologies, especially for surveillance in India

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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