Supreme Court upholds: ₹21,000 Cr GST against Gameskraft: The Karnataka High Court’s decision regarding GamesKraft has been suspended by the Supreme Court. A show cause notice (SCN) for the deposit of GST due in the amount of Rs. 21,000 crore had been stayed by the High Court in May. After three weeks, the case has been set for hearing.
Platforms like Rummy Culture, Rummy Platform, and Rummy Partner are operated by the company. The notice was issued after it was discovered that people were betting on the platform, according to sources in the GST Department. They claimed that between 2017 and 2022, the total face value of bets was Rs. 77,000 crore. Given that it was a game of chance, a rate of 28% was used; after fees, the total amount exceeds Rs. 21,000 crore.
For online gaming companies in different jurisdictional courts, said that as the Supreme Court has given an interim relief to the revenue against Karnataka High Court order, there are higher chances of recoveries, summons, statements and confirmation of demands happening in next three weeks. “In such a situation, the recovery proceedings will have to be separately challenged and stayed through the jurisdictional High Court by the online gaming companies”, an expert said.
After the GST Council recommended a uniform 28% tax on the face value for online gaming, casinos, and horse racing, as well as changes to the GST laws (CGST Act and IGST Act), the Apex Court decision is the second major setback for the online gaming industry. The government then passed a law to carry out the recommendation.
The amendments clearly distinguish between online gaming and gaming for money online, stating that in gaming for money online, a player pays or deposits money in anticipation of winning money in a game or event. The changes have no impact on taxation of casual online gaming, which involves no real money, betting, or wagering.
Regardless of whether the game is based on skill, chance, or both, the activity of playing for real money online will be taxed on the total amount paid to, payable to, or deposited with the supplier by or on behalf of the player. Additionally, “the Act has been amended to clearly provide that actionable claims involved in or by way of casinos, horse-racing, and online gaming are covered under the ambit of GST,” a government source said.
The definition of “supplier” is proposed to be amended to ensure that individuals or entities operating and managing digital or electronic platforms for supplying specified actionable claims are considered suppliers of such actionable claims and are liable to pay GST on the same. Also, registration under GST is being made mandatory for a person supplying online money gaming, from a place outside India to a person in India
The IGST Act amendment establishes tax obligations for foreign providers of online real money gaming, as well as provisions for their streamlined GST registration and the authority to block the websites and platforms of non-compliant providers.
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