The Directorate General of GST Intelligence is set to take on over a 100 online gaming firms in the coming months to see if there has been any evasion of the goods and services tax (GST).
Many state and central GST authorities are already investigating 35 to 40 online gaming firms. An estimated Rs 33,000 crore is at stake, according to a report by Business Today.
This comes days after the Supreme Court had stayed a Karnataka High Court order that quashed a Rs 21,000 crore GST demand notice on an online gaming company called Gameskraft.
“There are over 100 companies registered domestically with online gaming federations. We will start looking into the activities of these companies to check whether there has been any evasion of GST,” a senior official said.
Adding on to that the official said that, "out of these 100 companies not all will be involved in real money online gaming. Only those that have such games will be taken up for investigations.”
Moreover, a number of state GST departments such as those in Haryana and Maharashtra are also looking into activities of some of the online gaming companies. Similar probes are being launched by central GST authorities in some instances.
“The Supreme Court order gives some clarity to field units on how to proceed in these cases. The revenue department’s stand has always been that 28 per cent GST has to be levied on online games where real money is involved,” a source said.
A hearing is scheduled for the Special Leave Petition brought by the tax department over the Gameskraft case judgement on October 10, by the Karnataka High Court.
In the meantime, a 28 percent GST will be applied to the full face value of bets put at the entry level in accordance with the GST Council's resolution, rather than to wins that are utilized to place more bets.