In a significant development, online gaming companies in India have reportedly received notices totaling Rs 1 lakh crore from Goods and Services Tax (GST) officials, according to a report by Livemint.
Government sources claim that these firms have been evading taxes, a situation that the GST authorities began addressing in August of this year when they imposed a 28 per cent tax on online gaming deposits.
The repercussions of these notices are already affecting companies, as Delta Corp's shares hit a 52-week low, following a GST notice received by one of its subsidiaries.
The notice cites a Rs 6,384 crore tax shortfall, bringing the total tax demand on Delta Corp to over Rs 23,000 crore.
Last month, the company was served with a show-cause notice for allegedly underpaying taxes amounting to Rs 16,800 crore.
Other online gaming companies, including Dream11, have also recently received GST show-cause notices for suspected underpayment of taxes.
Notably, GamesKraft faced a show-cause notice last September, accusing the company of evading Rs 21,000 crore in GST.
Effective from 1 October, the GST authority has declared that all states will impose a 28 per cent GST on online money gaming. Furthermore, online gaming, casinos, and horse racing have been recently categorised as "actionable claims" under the Central GST Act.
This classification subjects these activities to a 28 per cent GST on the total face value of bets, placing them in alignment with lottery, betting, and gambling.
Union Minister Rajeev Chandrasekhar has highlighted the potential for substantial GDP growth in India, estimating up to $300 billion by 2026-27 through the expansion of artificial intelligence and the online gaming sector.
The government acknowledged the industry's concerns about high taxation and views lawful online gaming as an important opportunity for the youth.
Chandrasekhar revealed that the framework for online gaming is now in place and gradually being promoted to other government officials.
Nayan Dwivedi is Staff Writer at Swarajya.
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