In the 52nd GST council meeting, Delhi and Goa raised the issue of tax demands on e-gaming companies and casinos. Delhi Finance Minister Atishi said tax notices for the past 6 years calculated at a much higher rate of 28 per cent are being sent to online gaming firms, even though on October 1, this 28 per cent GST was to be implemented.
“An industry whose revenue is `23,000 crore, you are slapping a tax notice of `1.5 lakh crore...This is to kill the industry. This shows an unsafe erratic investment environment in Indian startups,” Atishi said.
Responding to online gaming companies and casinos, Revenue Secretary Sanjay Malhotra on Saturday reiterated that 28 per cent GST was levied on online gaming and casinos even before.
“Certain members had raised the issue of retrospective taxation. It was informed to them that this is not retrospective, and this was the law earlier. These liabilities already existed because money online games played with bets...They were already attracting (28 per cent GST) by way of betting or gambling,” Malhotra told reporters.
Malhotra further said some States like Delhi and Goa raised the issue of online gaming companies facing GST demand notices for alleged evasion.
Taking a dig at Atishi, Delhi BJP spokesperson Praveen Shankar Kapoor has said that it is shocking to see Delhi’s Finance Minister supporting Online Gaming as source of entertainment for people in smaller towns of the country.
“It seems problem with Atishi is that she has to oppose every decision of centre government and so she has today criticised centre for levying tax on Online Gaming,” he said.
According to Atishi, the tax could jeopardise the entire startup ecosystem, and might lead to significant job losses and hamper foreign investments.
“…It is very important that these kinds of notices that seek to finish the online gaming industry should be withdrawn. Today the GST Council meeting is taking place. I will bring this to the attention of the GST Council that our tax notices will lead to closure of our online gaming industry and it is important to withdraw these notices,” Atishi added.
She pointed out that the online gaming industry, employing over 50,000 individuals and enjoyed by 400 Mn Indians, is not a luxury akin to betting or horse racing.
“From 1 October, 28 per cent tax was to come into force. But before that, the GST Council’s Directorate General of GST Intelligence (DGGI) has sent tax evasion notices to the extent of `1.5 lakh crore to the online gaming industry,” the Minister said. Online gaming, casinos and horse racing were classified as actionable claims, like lottery, betting and gambling, under GST with 28 per cent tax.
The amendments to Central GST and Integrated GST were approved by Parliament and were notified by the central government effective October 1. States were also required to pass amendments to state GST (SGST) laws. So far, 18 States have passed the amendments either in their assembles or through ordinance. The remaining 13 states would also be passing the amendments, with effect from October 1 in due course.