States reject retroactively applying the GST to online gaming companies

During the GST Council meeting on Saturday, states argued against retroactively imposing the GST on online gaming enterprises, according to Maharashtra minister Deepak Vasant Kesarkar.

The idea of retroactively charging online gaming under the indirect tax system was debated before the Council, according to TS Singh Deo, the deputy chief minister of Chhattisgarh.

States stated that some enterprises are being asked to pay dues that are significantly more than their annual revenue.

“There were discussions on charges on these companies retrospectively,” he said after the meeting. There cannot be any intervention since DGGI is an autonomous organization. The chairman said that, if necessary, she will provide the DGGI with explanations.

Atishi Marlena, the finance minister for Delhi, said that tax notifications are being handed out for amounts that are far more than even the industry’s assessed value.

“This 28% GST on online gaming planned to go into effect on October 1. Online gaming enterprises have, however, received tax warnings for the previous six years that were calculated at a far higher rate, she said.

It should be noted that several gaming firms have received show-cause warnings during the previous few weeks.

Since the flood of notifications relate to the time before the implementation date of October 1, 2023—the day the new legislation took effect—many of them referred to this as retroactive taxes.

In August, the GST Council made the decision to change the indirect tax legislation. This was done to make it clear that a GST of 28% on the whole amount of the bets made would apply to any online games that include wagers, regardless of whether they are based on skill or chance.

The central government has so far defended itself against the claims made by the states by arguing that the show-cause notifications follow a clarification of the legislation rather than a change and that the demand for dues is not retroactive.