From Dream11 during IPL season to poker and ludo on the go, online gaming is surging in India with smartphone penetration connecting 4.2 crore gamers. The gaming industry hopes that the current 18 per cent GST on gross revenue will be left unchanged instead of raising it to 28 per cent as recommended by a panel of state ministers.
Amidst the speculation, the Karnataka High Court has quashed a GST notice for Rs 21,000 crore slapped on Gameskraft, the firm behind RummyCulture.
Notice sent despite court's stay
The notice by the Directorate General of GST Intelligence, was sent to Gameskraft, despite a stay on a previous tax demand of Rs 21,000 crore.
While giving the stay in September 2022, the court had observed that there were contentious issues with the case.
The GST authorities had raised the tax demand after searching Gameskraft's office, and charging it for evasion.
The company had argued that the case against it was based on the assumption that their activities were an actionable claim and not a service.
What does this mean for the industry?
After the verdict, Gameskraft expressed confidence that it would pave the way for a constructive dialogue with the authorities to frame better GST regulations for the online gaming sector.
The All India Gaming Federation also added that vindication for Gameskraft will help Indian gaming startups in ensuring growth for the entire industry.
Karnataka HC's judgment has also been hailed as a landmark verdict for the demarcation between online gaming and games of chance which involve betting.
