This is regarding news dated 25-09-2022. As per a press report, the Directorate General of GST Intelligence has issued show cause notice (‘SCN’) to Gameskraft Technologies Pvt. Ltd. (‘Gameskraft’) for INR 21,000 crores (USD 2.6 billion), the biggest ever in history of Indian indirect taxation. Gameskraft engages in hosting of online games on its platform and the game Rummy constitutes more than 96% of the games played on its platform.
The disputed period seems to be from November 2017 to February 2022 when the total income of Gameskraft is approx. INR 4,000 crores. The amount of GST in the SCN is at the rate of 28% of the total activity of Gameskraft; which is nearly INR 77,000 crores.
In a later development, Gameskraft issued a statement with regard to the show cause notice and stated that they, as a responsible startup with unicorn status in the online skill gaming sector, have discharged the GST and income tax liabilities as per standard industry practice.
Seized of the issue, GST Council has constituted, on May 24, 2021, a Group of Minister (‘GoM’) on casinos, race courses and online gaming to examine the issue of valuation of services provided by casinos, race courses and online gaming portals and to also examine whether any change is required in the legal provisions to adopt the better means of valuation of these services. The issue is whether the value of service should be only the platform fee or the full amount received from the gamers; and whether the game of skill and the game of chance should be distinguished for this purpose. The final report of GoM is awaited.
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