GST panel defers decision on online gaming tax liabilities

The GST panel, made up of state and central revenue officials, has delayed a final decision on how to handle the outstanding tax liabilities of online gaming companies, sources have told Business Today Television.

The 54th GST Council, set to meet on September 9, is expected to revisit this issue, despite the panel's recommendation to delay it. Many online gaming companies have written to the Ministry of Finance, highlighting the industry's total tax liabilities of Rs 1.5 lakh crore, with casino tax liabilities exceeding ten times their annual revenues.

In August 2023, during the 51st GST Council meeting, officials proposed changes to the Central Goods and Services Tax (CGST) Act, 2017, and the Integrated Goods and Services Tax (IGST) Act, 2017. These changes, including updates to Schedule III of the CGST Act, were intended to clarify the tax rules for casinos, horse racing, and online gaming.

The 52nd GST Council meeting on October 7, 2023, revisited the issue of tax liabilities for past cases. It was made clear that the proposed changes would only apply from October 1, 2023, onward. The Directorate General of GST Intelligence (DGGI) had issued notices for tax periods before these changes, based on the laws in place at the time. This means the council's decisions from the meetings in July and August 2023 are not being applied retrospectively.

During the 53rd GST Council meeting, the Union Finance Ministry proposed adding a new Section 11A to the CGST Act. This section would allow the central government to "not recover GST that was not levied or was under-levied due to general practice." However, sources say this proposal might not cover show-cause notices issued before July 2023, which could be disappointing for the industry.