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Gaming firms offer to pick up tax bill to keep players hooked

Economic Times

Economic Times · 1y ago

Gaming firms offer to pick up tax bill to keep players hooked

Online gaming platforms in India such as Dream11, Mobile Premier League, and Games24X7 are offering personalized offers and schemes to keep regular gamers and influencers engaged amid an increase in tax liability. The goods and services tax rate on real money gaming has been raised to 28%, resulting in platforms subsidizing the new tax liability through deposit offers and bonuses. The increased tax rate has driven users towards offshore and illegal gaming platforms that evade taxes and lack consumer protection measures, potentially impacting the growth of the online gaming industry in India.

Related News

Setback after cashbacks: Gaming industry faces fresh GST trouble - The Economic Times

Economic Times

Economic Times · 19d ago

Setback after cashbacks: Gaming industry faces fresh GST trouble - The Economic Times

The real money gaming industry in India is facing fresh challenges from GST authorities. Tax officials demand GST on cashbacks and bonuses given to players, treating these as taxable under Rule 31B. This intensifies the ongoing conflict over retrospective GST collection from 2017 to 2023. Gaming companies argue this interpretation is flawed and plan to challenge it in the Supreme Court. Some firms are considering forming a collective legal strategy as the tax issue gains momentum.

40 online gaming firms to get notices for tax evasion: Report

Inshorts · 1y ago

40 online gaming firms to get notices for tax evasion: Report

About 40 online gaming firms will get show-cause notices for alleged tax evasion after the Supreme Court stayed a Karnataka High Court order quashing a ₹21,000-crore GST evasion notice to Gameskraft, Moneycontrol reported. Since activities of Gameskraft and other gaming firms are identical, authorities had held back notices. Two ₹3,000-crore tax evasion notices have already been sent to two firms.

Real-money gaming companies look for an ace to beat tax blues

Economic Times

Economic Times · 1y ago

Real-money gaming companies look for an ace to beat tax blues

Gaming companies that offer online games involving real money, such as poker and fantasy sports, are implementing new approaches to discourage frequent withdrawals by users. These measures aim to minimize the impact of increased indirect tax and boost the companies' earnings. Some platforms are limiting the number of daily withdrawals, while others are adjusting the win percentages. The objective is to keep users' money in the system for longer, leading to higher compounded commission for the companies. These changes are being made in response to the new Goods and Services Tax (GST) regime, which has resulted in a 28% tax on player deposits.

Supreme Court to hear gaming firms’ challenge to 28% GST rule

Economic Times

Economic Times · 7m ago

Supreme Court to hear gaming firms’ challenge to 28% GST rule

The Supreme Court is set to hear petitions from online gaming firms and casinos challenging the 28% GST imposition on the full value of bets rather than gross gaming revenue. These firms face significant retrospective tax demands since 2023, fearing coercive actions by tax authorities. The Court had earlier stayed a Karnataka High Court judgment demanding Rs 21,000 crore GST from GamesKraft. The petitions argue against the government's view equating all online betting to gambling for tax purposes.

Offshore online gaming firms must register business in India or appoint proxy to pay tax

VCCircle

VCCircle · 1y ago

Offshore online gaming firms must register business in India or appoint proxy to pay tax

The Indian government mandates offshore online gaming firms to register locally or appoint a representative for tax payment on funds collected from customers. A 28% tax on total funds collected, not individual bets, is levied. Companies failing to comply may face blocks. Over 100 gaming firms and investors including Tiger Global protest the move. The government cites concerns about gaming's societal impact and youth addiction.

Layoffs, Closures: 28% GST Hits Online Gaming Industry Hard As Authorities Begin Tax Recovery

OutlookIndia

OutlookIndia · 1y ago

Layoffs, Closures: 28% GST Hits Online Gaming Industry Hard As Authorities Begin Tax Recovery

The implementation of a 28% tax on real money gaming (RMG) by the Goods and Services Tax (GST) Council has led to chaos in the online gaming industry in India. Several start-ups, including Dream11 and Games 24x7, have received tax notices amounting to around Rs 55,000 crore. Companies such as Super Group Limited and Nazara Technologies have already stopped operating in the Indian market, while others have resorted to layoffs. The new tax rate will also impact players' winnings and the competitiveness of gaming companies. The future of the industry remains uncertain as companies navigate the challenges posed by the tax changes.

Tiger Global, ChrysCap, Peak XV ask govt to reconsider GST on online gaming

VCCircle

VCCircle · 2y ago

Tiger Global, ChrysCap, Peak XV ask govt to reconsider GST on online gaming

Investment firms Tiger Global, ChrysCap, Peak XV, and ASK have requested the Indian government to reconsider the Goods and Services Tax (GST) on online gaming. They argue that the 28% GST rate on skill-based gaming platforms is excessive and should be reduced. These companies believe that a lower tax rate would encourage growth and investment in the online gaming industry.

Online gaming companies get summons for cashback to players since October

Economic Times

Economic Times · 1y ago

Online gaming companies get summons for cashback to players since October

The Directorate General of GST Intelligence (DGGI) has issued fresh summons to online gaming companies, including Delta Corp, to provide information on the cashback given to players. The DGGI found that taxed money was being reimbursed to players as cashback in separate promo accounts by gaming companies after the implementation of the 28% GST on the full betting amount. The investigation focuses on cashback provided between October 2023 and June 15, 2024. Gaming companies are already facing tax demands of around ₹1.14 lakh crore with pending appeals in courts.

SC stays GST notices worth over Rs 1 L Cr against online gaming firms for tax fraud

YourStory

YourStory · 7m ago

SC stays GST notices worth over Rs 1 L Cr against online gaming firms for tax fraud

The Supreme Court has stayed GST authorities' showcause notices, valued at over Rs 1 lakh crore, against online gaming firms over alleged tax evasion. Justices J B Pardiwala and R Mahadevan ruled that all proceedings against these companies remain paused, pending further hearing. The GST law was amended in October 2023 to require foreign online gaming firms to register in India, with a 28% GST on bets. Various firms challenged these demands, and the Supreme Court consolidated cases for review.

Government to impose 28% GST on online games

Entrackr

Entrackr · 2y ago

Government to impose 28% GST on online games

The 50th Goods and Services Tax (GST) Council meeting on Tuesday decided that a 28% GST will be levied on the full face value of online gaming. The move deals a severe blow to the gaming companies that offer real-money games.

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