Recently, a retrospective tax was imposed on online gaming companies, which made quite an impact on them. Now, there might be hope for relief, as the GST council might amend the CGST act imposed on the Indian gaming companies. Although there might not be any taxation involved in the future, there won’t be any refunds of overpaid taxes.
The Economic Times reported that the GST council has mooted the amendments to quash the retrospective tax demands from online gaming companies. As the report mentions, unclarity in the tax notices, which led to lower tax payments, can be quashed. In simple terms, a retrospective tax means that the Government can impose/collect taxes on an organisation’s transaction or a deal.
Official Reports On The Retro Tax Demands
There is going to be a council meeting on June 22nd that could lead to a call on recommendations. In the meeting, the law committee could introduce a new section 11A in the legislation as per the CGST Act, 2017.Â
This proposal of amendment could focus on the government not recovering GST that’s short-levied or not-levied as a result of general practice. It is expected to allow the authorities to quash the tax demands from gaming companies raised with retrospective effects. However, companies won’t be able to claim any refunds on their overpaid GST.
In the financial year 2023-2024, the DGGI (Directorate General of Goods and Services Tax Intelligence) identified 6,323 tax evasion cases. All those tax evasion cases totaled an amount of Rs. 1.98 Lakh Crores. From which the online gaming sector had the most tax evasion notices, totaling over Rs. 1 Lakh Crore.
People familiar with the development said that low taxes were paid due to a lack of clarity and wrong interpretation of the law. In these cases, as per the recommendations, the tax notices will most likely be quashed. More information is yet to be announced by the authorities.
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