GST Council to hear gaming firms’ plea

New Delhi, May 20, 2024

Officials examining their request for relief from tax notices

Online gaming companies received a big blow last year, when the government issued notices for over ₹1 trillion in goods and services tax (GST). While the matter has ended up in the Supreme Court, the federal indirect taxes body GST Council now plans to consider the impact of the tax demand on the industry's viability, two people aware of the matter said.

Central and state GST officials are examining the grievances of online gaming companies and their request for relief from the tax notices issued for the period till October 2023, totalling over ₹1.12 trillion, across 71 cases, the people said on the condition of anonymity. Under GST laws, penalty can match the tax specified in the notice, which could increase the tax claim further.

“Officials are examining the plea made by online gaming companies about the tax notices. It will be considered by the GST Council at its next meeting, which could either be at the end of June or early July,” said one of the two persons cited above. The person said “some discussions”

TOUGH GAME

71 notices demanding ₹1.12 tn in tax were sent for FY23, FY24

UNDER GST laws, penalty can match the tax demanded

are going on, but declined to describe it as a “relief to the industry” yet.

Until last year, the law did not specify tax rates on online gaming, and companies used to pay 18% GST on the platform fee or commission (which ranges from 5-20% of the deposits). On 1 October 2023, the

BUT strong rationale is required to give any relief on past dues

GST Council set 28% tax on the full face value of deposits, which was followed by tax demands on previous earnings by the gaming companies. While the companies have challenged it in court, finance ministry officials have earlier said that

[Mint]