Online gambling companies would be subject to a tax demand of Rs. 45,000 billion: report

Online gambling enterprises with platforms that ostensibly provide games of skill might owe more than Rs 45,000 crore in taxes. Starting in 2017, when the Goods and Services Tax (GST) was put into effect, the Central Board of Indirect Taxes and Customs (CBIC) allegedly evaluated the tax liabilities of such businesses.

The platforms that provide games of skill reportedly paid 18% tax on their company up to this point, according to an Economic Times article. However, the GST Council’s decision to tax businesses that provide both skill-based and chance-based games at the same rate has raised these businesses’ tax obligations. The article further said that notifications are already being sent to these businesses by the Directorate General of GST Intelligence (DGGI).

To abolish the separate taxes on games of skill and chance, the CGST and IGST legislation were amended during the just finished Monsoon session of Parliament.

According to the article, a number of industry participants have petitioned the government to refrain from taxing them in the past. Online gaming firms have paid less than 5,000 crore rupees in GST since its commencement in 2017, according to data published by ET. The research estimates that these firms’ actual liabilities at this time was around Rs 50,000 crore.

 

Notably, in September of last year, DGGI sent Gameskraft a letter requesting Rs 21,000 crore in GST. The Karnataka High Court, however, dismissed the notice in May of this year.

 

The Centre has appealed the ruling to the Supreme Court, pointing out that the recent modifications make it plain that 28% GST would be applied to all online gambling.