The government had defended the move, citing concerns about addiction. The Revenue Secretary said the industry has stabilised, but it is early to make conclusive remarks.
The Central government has clarified to the states that the goods and services tax (GST) on online gaming companies is not being levied retrospectively since some online games involved in betting were already being charged a 28 per cent GST under the law earlier.
Certain states during the GST Council meeting on October 7 are reported to have flagged the issue of retrospectively imposing GST on online gaming companies, according to Maharashtra minister Deepak Vasant Kesarkar.
However, Finance Minister Nirmala Sitharman said the issue was not on the agenda of the GST Council meeting but raised by some states such as Goa after the meeting was over.
“It was informed to certain members that this is not retrospective and this was the law earlier. These liabilities were already existing because money online games played with bets… they were already attracting by way of betting or gambling 28 per cent GST,” Revenue Secretary Sanjay Malhotra said in answer to a question at a press conference after the meeting.
A number of online gaming companies have been issued show-cause noticing for allegedly evading GST with cumulative amount adding up to whopping Rs 55,000 crore.
Many have termed this as retrospective taxation claiming that the notices pertain to the period before the October 1, 2023 implementation date for a new tax treatment for gaming platforms.
Chhattisgarh Deputy Chief Minister T.S. Singh Deo also said that the Council discussed the issue of retrospectively taxing online gaming under the indirect tax regime with the dues being demanded from some firms exceeding their turnover.
Delhi Finance Minister Atishi also said on Saturday that the proposed 28 per cent Goods and Services Tax (GST) on online gaming firms could jeopardise the entire Indian startup sector, potentially leading to significant job losses and hit foreign investments.