CA Aakash Sarda
Quick Summary
Issuance of notices under GST to Online Gaming Companies Recently, online gaming companies are in receipt of pre-SCN notices in Form GST DRC-01A alleging that games wherein both skill and chance are involved such as rummy, poker etc. is predominately a game of chance and therefore will be treated
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FAQ :
Online gaming companies are receiving GST notices because authorities are classifying games involving both skill and chance as 'betting' or 'gambling', making them subject to GST at 28% on the full betting amount.
The core issue is whether online games involving both skill and chance should be treated as games of chance (betting/gambling) or games of skill, which impacts their taxability under GST.
Amendments have defined 'online money gaming' and clarified that these activities are subject to GST, irrespective of whether the outcome depends on skill, chance, or both. They also mandate registration for foreign suppliers.
Previously, companies paid GST on platform fees. Now, if classified as betting or gambling, they face GST at 28% on the full betting amount, a substantial increase in liability.
While some states recognise skill-based games as legal businesses, the recent GST amendments aim to bring all 'online money gaming' under GST. The classification of these games remains a point of legal debate.
The Supreme Court's interim stay on the Karnataka High Court's judgment in the Gameskraft case has amplified the ongoing issue regarding the classification and taxation of online gaming.
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