The company is accused of promoting online betting through card, casual and fantasy games like Rummy Culture, Gamezy and Rummy Time.
In what could be the one of the biggest indirect tax claims, the Goods and Services Tax (GST) Intelligence Wing has served a show cause notice (SCN) of Rs 21,000 crore on Bengaluru-based online gaming company Gameskraft Technology (GTPL).
The GST Department has accused Gameskraft of evading taxes on the amount earned through betting and gambling, adding that the company is hence liable to pay a GST of 28 per cent on the ‘face value’ of collections made. Gameskraft has dubbed the notice a “departure from the well-established law of the land”.
The company is accused of promoting online betting through card, casual and fantasy games like Rummy Culture, Gamezy and Rummy Time. This is despite the the fact that the GST Council, the authority that takes all GST related decisions, is yet to take a final call on whether online games are game of skills or chance.
The reportedly largest GST notice ever has been served on the gaming company for transactions that happened between 2017 and June this year. The gaming platform has been accused of providing back-dated invoices to the tax authorities for the purpose of evading taxes.
The authorities have levied 28 per cent GST on the betting amount which reportedly counts up to approximately Rs 77,000 crore. They have alleged that GTPL has allowed its clients to place bets in the form of money on the games played online. It has been found that the company was not issuing any invoice to its customer on the betting amount.
GST authorities had raided the premises of Gameskraft in December last year and allegedly found tax evasion of Rs 460 crore before attaching their bank accounts and property. The department is now said to be eyeing a Rs 2.5 lakh crore GST recovery from multiple online gaming apps, through a crackdown on the industry.
This action has come at a time when the GST Council is examining a taxation issue with respect to online gaming and has tasked a high-level ministerial panel to make a suggestion on the matter. The Council is expected to meet next month to take up the panel’s report on the issue.
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