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Online Gaming Companies Issued ₹1 Lakh Crore GST Notices for Tax Evasion
A host of online gaming, like Dream11, and casino operator, like Delta Corp, have received GST show cause notices last month for alleged short payment of taxes. File.
| Photo Credit: Reuters
GST authorities have issued show cause notices worth ₹1 lakh crore to online gaming companies for tax evasion so far, a senior official said on October 25.
The official, however, said that there is no data yet of foreign gaming companies registering in India since October 1.
The government has amended the GST law, making it mandatory for overseas online gaming companies to register in India from October 1.
Significance of the GST Notices
The issuance of ₹1 lakh crore worth of GST notices to online gaming companies highlights the government’s efforts to crack down on tax evasion in this sector. By making it mandatory for foreign gaming companies to register in India, the authorities aim to ensure that these companies contribute their fair share of taxes to the country’s revenue.
Features of the GST Notices
The GST notices serve as a show cause for alleged short payment of taxes by online gaming companies such as Dream11 and Delta Corp. These notices require the companies to provide a valid justification or explanation for the alleged tax evasion.
Objectives of the GST Notices
The main objective of the GST notices is to address the tax evasion issue and ensure compliance with the amended GST law. By holding online gaming companies accountable for their tax obligations, the government aims to strengthen tax revenue and create a level playing field in the gaming industry.
Effects of the GST Notices
The issuance of these notices sends a strong message to online gaming companies about the seriousness of tax evasion. It serves as a deterrent for future evasion attempts and encourages companies to fulfill their tax obligations. Additionally, the government’s actions may lead to increased transparency and accountability in the online gaming sector.
Pros and Cons
Pros:
- Enhanced tax revenue for the government
- Level playing field for all gaming companies
- Encourages compliance with tax laws
Cons:
- Potential negative impact on the growth of online gaming industry
- Possible resistance and legal battles from affected companies
Fun Fact
The highest amount of GST notice, worth ₹21,000 crore, was sent to GamesKraft in September last year for alleged GST evasion. While the Karnataka High Court ruled in favor of the company, the central government filed a Special Leave Petition (SLP) in the Supreme Court in July, indicating the complexity and significance of these tax evasion cases.
Source: The Hindu
Mutiple Choice Questions
1. According to the information provided, how much worth of show cause notices have GST authorities issued to online gaming companies?
a) ₹10,000
b) ₹1,000
c) ₹1,00,000
d) ₹1,00,00,000
Explanation: The senior official mentioned that GST authorities have issued show cause notices worth ₹1 lakh crore to online gaming companies for tax evasion.
2. What is the recent amendment in the GST law regarding overseas online gaming companies?
a) They are exempt from registering in India.
b) They are required to register in India from October 1.
c) They must pay a higher GST rate than Indian gaming companies.
d) They must submit annual reports to the GST authorities.
Explanation: The recent amendment in the GST law makes it mandatory for overseas online gaming companies to register in India from October 1.
3. Which online gaming companies have received GST show cause notices for alleged tax evasion?
a) Dream11
b) Delta Corp
c) Both Dream11 and Delta Corp
d) GamesKraft
Explanation: Both Dream11 (an online gaming company) and Delta Corp (a casino operator) have received GST show cause notices for alleged short payment of taxes.
4. What is the GST rate levied on the full value of bets placed on online gaming platforms?
a) 15%
b) 18%
c) 28%
d) 30%
Explanation: The GST Council has clarified that 28% Goods and Services Tax (GST) would be levied on the full value of bets placed on online gaming platforms.
5. Which company received a show cause notice for alleged GST evasion of ₹21,000 crore?
a) Dream11
b) Delta Corp
c) GamesKraft
d) None of the above
Explanation: GamesKraft received a show cause notice in September last year for alleged GST evasion of ₹21,000 crore. The case is currently being heard in the Supreme Court.
Brief Summary | UPSC – IAS
The Indian government has issued show cause notices totaling ₹1 lakh crore to online gaming companies for alleged tax evasion under the Goods and Services Tax (GST). These companies, including Dream11 and Delta Corp, have been accused of short payment of taxes. Additionally, the amended GST law now requires foreign gaming companies to register in India as of October 1, although there is currently no data on the registration of foreign gaming companies. A separate show cause notice was sent to GamesKraft in September 2019 for alleged GST evasion of ₹21,000 crore, with the central government filing a Special Leave Petition in July.