The Supreme Court order upholding the retrospective implementation of GST (goods and services tax) on online gaming is expected to lead to the resumption of tax recovery proceedings against gaming companies by the authorities.
On Wednesday, the Supreme Court upheld the retrospective implementation of 28 percent GST on the full face value of bets in online games.
While the decision is seen as a setback for gaming companies, the Directorate General of GST Intelligence (DGGI) is gearing up to resume tax recovery proceedings, according to a report by The Economic Times.
The DGGI had issued show-cause notices to around 80 online gaming companies and casinos for allegedly evading tax worth Rs 1 lakh crore.
Several gaming companies had approached their respective high courts against the notices. The Supreme Court later transferred the cases from nine high courts to itself.
Officials of the finance ministry’s revenue department, under which the DGGI functions, are expected to assess the Supreme Court order. They are also open to engaging with industry stakeholders to address concerns regarding penalties and interest, the report added.
The tax dispute between the government and gaming companies began in 2022 when the DGGI issued a notice to Gameskraft, seeking around Rs 21,000 crore for the period between 2017 and 2022, along with interest and penalties.
At that time, it was one of the highest tax demands ever raised.
Similar notices were later issued to other online gaming companies.
For companies facing these tax demands, the Supreme Court verdict could have major financial implications.
The affected companies still have the option to seek a review of the court order. However, this may further delay clarity on the final tax demand and could increase the total amount because the DGGI is also seeking interest.
According to experts in the online gaming industry, many companies have already shut down after receiving tax demand notices, while the latest court order could further accelerate the process.
