08.12.2022: Post-probe move against online gaming companies awaits Karnataka High Court ruling

The Central Board of Indirect Taxes and Customs (CBIC) will initiate action against online gaming companies, based on its investigation, after the Karnataka High Court decides on a challenge petition filed by Bengaluru-based Gameskraft.

“Online gaming is mainly game of chance and, accordingly, it will attract GST at 28 per cent. We are investigating online gaming companies and it will continue. However, we would like to wait for Karnataka High Court ruling before initiating any action such as issuance of show cause notice,” a senior government official said. In September, Bengaluru-based online gaming company Gameskraft Technologies challenged the show cause notice issued by the Directorate General of Goods and Services Tax Intelligence (DGGI) for a tax demand of over ₹21,000 crore. The official said that hearing in the matter has been completed with submissions by both parties, and the court has reserved its order, which is expected any day.

There is a two-tier rate structure for online gaming — 18 per cent for game of skill and 28 per cent for game of chance. Most online gaming companies levy GST at 18 per cent, claiming it is a game of skill contrary to the GST Department’s claim. These claims and counter-claims have been subject to litigation.

Source: The Hindu Business Line 

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