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Gov Reconsidering Retrospective GST Demand Notices Issued to Real Money Gaming Cos: Report

The government’s decision in July 2023 to tax real money gaming companies at par with online gambling came had an impact on the sector, with companies describing the move as a body blow to its projected fortunes.

We missed this earlier: Sources speaking to CNBC-TV18 earlier this week claimed that the Indian government may be reconsidering the massive retrospective tax evasion notices issued to online real money gaming companies over the last year. The sources added that the government “realised” the retrospective tax demands can pose an “existential issue” for real money gaming companies.
The reports follow the government’s decision last July to tax online games played for stakes at par with gambling at 28% GST. During the announcement of the hike, Finance Minister Nirmala Sitharaman asked “can the tax on casinos be less than the tax on food products?…There was a moral question discussed: on the one hand, we shouldn’t shut down the industry, but that doesn’t mean that we give them more incentives than essential goods.” The online real money gaming industry, which offers skill (or non-gambling) games for stakes, described the move as a body blow to its projected fortunes. Mass layoffs were also reported.
Multiple online real money gaming companies were soon served massive tax evasion notices by GST authorities shortly after, running into thousands of crores, allegedly covering periods well before the hike came into place. This runs contrary to the government’s clarifications last year that the new tax regime, enforced from October 1st, 2023, will not be applied retrospectively.
Additionally, before the hike came into force last year, the Karnataka High Court struck down a Rs. 21,000 crore GST evasion notice issued to online real money gaming major Gameskraft. The GST authorities claimed that by offering online skill gaming for stakes the company was indulging in gambling activities, and should be taxed accordingly. The High Court quashed the order, arguing that games of skill cannot be construed as gambling games, simply because they’re played for stakes or online.
The GST Authorities have now challenged this verdict before the Supreme Court of India, with final hearings listed for April 2nd. The case was tagged with a separate challenge by the online real money gaming industry questioning the legality of the show cause notices.
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