India's GST officials have served notices worth 1 lakh crore to online gaming companies, according to a Reuters report.

In August this year, the GST authority imposed a 28% tax on online gaming companies on the total funds deposited to play online games.

Last week, Delta Corp received a GST notice for a short tax payment amounting to Rs 6,384 crore, taking the company's overall tax demand to over Rs 23,000 crore.

Last month, the company was slapped with a show cause notice for alleged short payment of taxes worth Rs 16,800 crore.

 

A number of other online gaming firms, such as Dream11, also received GST notices this month for allegedly short payment of taxes.

Separately, a show-cause notice was sent to GamesKraft in September last year for alleged GST evasion of Rs 21,000 crore.

GST on online gaming firms

The Finance Ministry notified October 1 as the date for implementing of the amended GST law provisions for taxing e-gaming, casinos, and horse racing.

The amendments to the Integrated GST will make it necessary for offshore online gaming platforms to register in India and pay taxes in accordance with domestic law, the GST Authority said.

According to the latest changes to the Central GST law, online gaming, casinos, and horse racing are now treated as “actionable claims” similar to lotteries, betting, and gambling and are subject to GST at a rate of 28% on the total face value of bets.

Union Minister Rajeev Chandrasekhar recently said that the artificial intelligence and online gaming segments can add up to USD 300 billion to India's GDP by 2026-27.

On concerns raised by the online gambling industry about high taxes, he said the government considered “permissible and legally acceptable” online gaming as being an important part of opportunities for young people.

"However, it has become clear that there are some bad actors in the gaming sector who have been misusing the internet and there is absolutely justification for cracking down on them. The online gaming framework has been finalized and is gradually defending itself against the rest of the government," Chandrasekhar said.

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