A significant Goods and Services Tax (GST) dispute has arisen, with the GST department seeking 28% GST on the entire entry fees for online rummy, amounting to approximately ₹21,000 crore. The department argues that online rummy is a game of chance, akin to betting and gambling, making the entire entry fee taxable. The gaming company, Gameskraft, contends that online rummy is a game of skill, constitutionally protected, and that they act as an intermediary providing facilitation services on which GST is paid. The outcome of this litigation is highly anticipated and will significantly impact the online gaming sector.
Recently, a SCN, to the leading online gaming platform company named GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED, has been issued, attempting to impose a 28% GST on the entire entry fees paid by the participants. Around Rs. 21,000 crore of goods and services tax liability is at stake, perhaps making the
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FAQ :
The main contention is whether online rummy is a game of skill or a game of chance. The GST department argues it's a game of chance, subject to 28% GST on total entry fees, while gaming companies argue it's a game of skill, with different tax implications.
An actionable claim is a claim to any debt or a beneficial interest in moveable property not in possession, recognised by civil courts. For GST purposes, actionable claims, other than lottery, betting, and gambling, are neither a supply of goods nor a supply of service.
The GST department argues that Gameskraft facilitates betting and gambling through its platform, and therefore, a 28% GST should be levied on the entire entry fees paid by participants, not just the company's revenue.
Gameskraft maintains that online rummy is a game of skill, constitutionally protected, and that they act as an intermediary providing facilitation services for which they earn a platform fee, on which GST is paid. They argue the transactions between players are separate.
The outcome of this litigation is eagerly awaited as it will have a significant impact on the entire online gaming sector, influencing how actionable claims are taxed, the valuation of services, and the applicable tax rates.