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Extensive GST Evasion Probe Targets Over 100 Online Gaming Companies

gst evasion

In a bid to combat potential GST evasion, tax authorities are expanding their investigation into online gaming firms. Reliable sources indicate that the Directorate General of GST Intelligence (DGGI) plans to launch probes into 100 additional companies in the coming months to determine if they have engaged in GST evasion.

This move follows a Supreme Court decision to halt a Karnataka High Court ruling that dismissed a significant GST demand notice of Rs.21,000 crore on the online gaming company, Gameskraft.

A senior official stated, “There are over 100 companies registered domestically with online gaming federations. We will initiate investigations to assess whether any GST evasion has occurred, particularly focusing on firms involving a monetary component in their gaming activities.”

Clarifying the scope of investigation, the official mentioned, “Not all 100 companies are engaged in real-money online gaming. We will investigate only those that offer such games.”

Currently, the DGGI is actively investigating 35 to 40 online gaming firms for potential GST evasion and is expected to issue notices in many of these cases. The estimated total monetary involvement in these cases is staggering, exceeding Rs 33,000 crore.

Furthermore, various state GST departments, including those in Haryana and Maharashtra, are also scrutinizing the activities of select online gaming companies. Concurrently, Central GST authorities are initiating similar investigations in certain instances.

The recent Supreme Court ruling has provided clarity to field units on how to proceed in these cases. The revenue department has consistently advocated for a 28% GST levy on online games involving real money. The second source highlighted, “The Supreme Court ruling clears the path for field units to conclude investigations and proceed with these cases, issuing show cause notices.”

The Special Leave Petition filed by the revenue department regarding the Karnataka High Court ruling in the Gameskraft case is scheduled for a hearing on October 10, 2023.

In alignment with the GST Council decision, a 28% GST will be imposed on the entire face value of bets at the entry level, rather than solely on the winnings, which are subsequently utilized for placing further bets.

Source Link-https://www.businesstoday.in/latest/corporate/story/over-100-more-online-gaming-firms-to-be-investigated-for-gst-evasion-399567-2023-09-25

Also Read-https://anptaxcorp.com/delta-corp-gets-gst-demand-notice-of-nearly-17000-crores/

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