As per those with knowledge of the situation, the Goods and Services Tax (GST) authorities plan to issue 40 online gambling enterprises with new tax demand notices. This comes after the GST Council approved a flat 28% tax on internet gambling on Tuesday.
According to officials, the liability for the 40 online gambling organizations might total Rs 10,000 crore. According to the individuals described above, the authorities had been waiting for clarification from the GST Council regarding the taxation of online gambling enterprises.
In addition, the Centre is anticipated to challenge the Karnataka High Court’s ruling in the Rs 21,000 crore Gameskraft tax issue to the Supreme Court.
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When will the GST Authorities serve the notice?
This would happen after the law is modified to permit the 28% rate.
According to the official stated above, after the council’s decision, the Central Board of Indirect Taxes and Customs would issue new directions for cases now pending in various courts. The official declared, “We will begin legal action against 40 online gaming companies where the action was pending due to legal complexity over (the distinction between) games of skill or chance.”
The online gaming platform Gameskraft had contended in the Gameskraft case that the applicable rate should be 18%, which was once the slab for games of skill. Gameskraft’s products, according to the Directorate General of GST Intelligence, are considered games of chance and as such are subject to the 28% charge.
A top official informed the reporters, “We have postponed filing a petition in the Gameskraft case because we were awaiting the council’s decision. Once the amendment is finished, we will move the Supreme Court.”
The GST Council’s decision, which mandates that all online gaming, regardless of whether it is based on skill or chance, shall be subject to the highest GST rate, has been roundly condemned by the sector. Last year, the GST authorities demanded Rs 21,000 crore in back taxes from gambling company Gameskraft.
The official added that part of the amendment has been sent to the states for feedback and is anticipated to be introduced during the monsoon session, which starts on July 20. Sanjay Malhotra, the revenue secretary, stated on Tuesday that the government will keep pursuing the GST cases in court.
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