• Notification Date: 03-10-2023
• Notification No: N/A

All-India Gaming Federation appeals Finance Ministry to suspend GST Notification on Online Gaming

Following the Centre’s notification that the 28 percent GST rates would be implemented on online gaming companies from October 1, the All-India Gaming Federation (AIGF) wrote to the finance ministry, raising concerns. The federation has asked the Department of Revenue to suspend the notification implementing the 28 percent GST. 

The letter, written to Revenue Secretary Sanjay Malhotra, has sought a suspension of the amendment notice until all states pass their respective amendments, in line with the judgment of the Supreme Court of India. 

The federation has based its request on the fact that at least 15 states are yet to make changes to their state GST laws. Many of the online gaming companies registered in these states can face challenges when there is no uniformity in the statutory framework. AIGF, in its letter, has said that the notification from the centre could open ‘floodgates of unilateral actions in future by various states in various other aspects of GST.’ 

“At the outset, it is submitted that the very edifice of GST laws is premised on simultaneous taxing powers between the Centre and the States as encapsulated under Article 246A of the Constitution of India, 1950 (“COI”). The principle of simultaneous taxing power connotes that qua taxation under GST laws, the Centre and the States shall simultaneously make laws, as opposed to unilaterally,” as per the letter. 

According to experts, since amendments to State GST laws are yet to be passed, online gaming companies cannot charge SGST and can only charge CGST. Will online gaming companies be penalized for not being able to charge appropriate GST, AIGF asked this question in its letter. 

Online gaming companies have also raised concerns about aligning business practices with the legal framework. The federation has said that it will be a massive challenge for companies to operationally adapt to these large-scale changes when there is no uniformity in the statutory framework. 

In recent weeks, GST authorities have issued several notices of tax evasion to online gaming companies. In the most recent case, fantasy gaming company Dream 11 filed a writ petition in the Bombay High Court challenging a GST notice alleging GST evasion.