Online gaming companies have been facing a slew of retrospective tax notices since September 2022, with Gameskraft, Delta Corp and others receiving notices to pay Rs 1.12 lakh crore (total due), as per GST department calculations (at 28 per cent on face value). bets). . The sector may also not get any potential recovery at the next meeting of the Goods and Services Tax Council scheduled to be held next June, after the formation of the new government, as many companies hope.

A government official at a high level has suggested that it is improbable for there to be adjustments made to the current 28 percent Goods and Services Tax (GST) on the original amount of online gaming wagers in the assessment.

The GST Council meeting is scheduled for late June, following the installation of the new government. It will assess earnings from online gaming starting on October 1, 2023. The Council has settled on a 28 percent face value, which is expected to be maintained as the government's GST revenue from online gaming has grown 5-6 times in the past six months. The tax information will be gathered and sent to the Council.

Starting on 1 October 2023, the GST Council has placed a 28 percent tax on the total face value of online gaming bets, with a commitment to reassess the tax in six months. The sector aims to determine the 28 percent GST based on the total gaming revenues instead of the bet's original amount.

Gross Gaming Revenue (GGR) is the net result of subtracting the amount won from the amount bet. The complete value of the face is known as the bet amount or entry fee for the competition. Starting October 1, 2023, players will be required to pay 28 percent GST on their deposits for each game played, a cost that is currently being shared by online gaming companies.

The above-mentioned official added that online gaming will not be discussed by the GST Council's preparatory committee, but rather will be presented directly to the Council for review. The preparation committee includes revenue officials from both the Center and the states.

"Earlier, online gaming GST amounted to approximately Rs 200 crore per month. However, starting from October 1, 2023, it surged substantially to Rs 1,100 crore per month," he disclosed. "The most recent evaluation of online gaming revenue was conducted in Haryana and Karnataka."

In the October-December 2023 quarter, GST from online gaming stood at Rs 3,470 crore, a more than five-fold jump from Rs 605 crore collected in the previous quarter.

“The online gaming industry may have to work on ways to increase its revenue through other business strategies,” the official added.

 FAQ’S

Q. What is GST?

A.The Goods and Services Tax (GST) is a tax on the supply of goods and services. It is essentially a tax on the value addition at each stage and a supplier at each stage is permitted to claim set-off, through an input tax credit mechanism i.e. the tax paid on the purchase of goods and services is available for set-off against the tax to be paid on further supply of goods and services. The Act, Rules and the rate of GST across all Indian states including union territories are uniform.

Q.What is the current rate structure under GST?

A.The rate structure consists of four slabs i.e. 5, 12, 18 and 28 per cent, GST compensation cess on selected goods besides goods which are taxed at nil rate (fully exempt). GST tariff should be referred to, to know tax rate for respective goods and services.

Q.What is the process of registration under GST for existing businesses/applicants?

A.Under the erstwhile regime, taxpayers were separately registered with the state and/or with central tax administrations or with both based on their business activity. In the GST regime, a taxpayer is required to obtain state-wise single registration. Even within a state, the taxpayer has an option to obtain multiple registrations for different businesses, if required.

Also Read: March GST collection up 11.5% YoY at Rs 1.78 lakh cr, FY24 mop-up crosses Rs 20 lakh cr