By Dr. Anup K Tiwari
Published on: October 31, 2023 at 14:44 IST
The Indian government has issued show-cause notices worth ₹1 lakh crore to multiple online gaming companies for alleged tax evasion. The notices were issued by the Central and state GST authorities, and they cover a wide range of issues, including jurisdictional disputes, interpretation of the GST law, and non-compliance with tax filing and payment requirements.
The government’s crackdown on the online gaming industry comes as it seeks to boost tax revenue and improve the efficiency of the GST regime. However, the notices have raised concerns among businesses, who worry about the multiplicity of notices, lack of uniform process, and poor coordination between the Centre and state tax authorities.
One of the major concerns raised in the notices is that of Jurisdictional power. The revenue department officials argue that the state GST authority has jurisdiction over a gaming company even if its key operations and headquarters are located in another state, as long as the company has taken registration in that particular state. This could lead to multiple states claiming jurisdiction over the same company, which could create confusion and additional compliance costs for businesses.
Interpretation of the GST Law
Another issue raised in the notices is the interpretation of the GST law. The GST law is complex, and there are often different interpretations of its provisions. This can lead to disputes between businesses and tax authorities. For example, there is a dispute over whether the GST should be levied on the full value of bets placed on online gaming platforms or only on the profit margin.
Non-Compliance with Tax Filing and Payment Requirements
The notices also allege non-compliance with tax filing and payment requirements. For example, some gaming companies are alleged to have not filed GST returns or to have filed inaccurate returns. Others are alleged to have claimed input tax credits that they are not entitled to.
The industry is concerned about the multiplicity of notices, lack of uniform process, and poor coordination between the Centre and state tax authorities. The industry is also concerned about the interpretation of the GST law and the potential for multiple states to claim jurisdiction over the same company.
The Indian government’s crackdown on the online gaming industry is likely to have a significant impact on the sector. Businesses will need to carefully review their tax compliance practices and ensure that they are in line with the GST law. The industry should also work with the government to address the concerns that have been raised.