Online Gaming Firms Get GST Show-Cause Notices Worth Rs 1 Lakh Crore: Report (Image: Pixabay)

The Good and Services Tax (GST) authorities have reportedly issued show cause notices worth ₹1 lakh crore to online gaming companies. According to reports, citing a senior government official, there is no data yet of foreign gaming companies registering in the country since October 1. The official also reportedly said that this amount is to the tax demand made to online gaming companies and the amount of casino operators are not included in it. Earlier in July, the GST Council took a major decision to impose 28 percent tax on online gaming, horse racing and casinos.

The 28 percent GST for online gaming firms came into effect on October 1. The GST Council took this decision during the 50th GST Council meeting. On August 9, the Union Cabinet approved a bill to amend GST laws to impose 28 percent GST. Later, the Lok Sabha and Rajya Sabha passed these amendments to the Central and Integrated GST laws during the Parliament Monsoon Session. In April 2023, the central government announced a new set of rules for online gaming that ban any game that involves betting and wagering. Rajeev Chandrasekhar, Minister of State for Electronics and IT, said on that occasion that the Centre has decided to opt for a self-regulation model for the online gaming sector.

Shortly after announcing the 28 percent GST, industry bodies, game developers, and online skill gaming companies appealed to PM Narendra Modi”s office and other ministries to reconsider the decision. The gaming companies estimated the GST decision would lead to an “unprecedented” 400–500 percent rise in the GST burden.