The Centre on Saturday clarified that amendments in State Goods & Services Tax (SGST) related to clarificatory norms of 28 per cent GST for online money gaming, casinos and horse racing will be deemed effective from October 1, even if the legislative process is completed after the said date. This remark has been made at a time when some States and the online gaming industry have questioned the implementation of the clarificatory law as not all have amended SGST.

Meanwhile, Revenue Secretary Sanjay Malhotra reiterated that the 28 per cent GST for online money gaming, casinos and horse racing has been in effect since the beginning. “During previous meetings of GST Council, all agreed on decisions related to amendment in the law to provide clarification on 28 per cent GST on full face value regarding online money gaming, casinos and horse racing will be applicable from October 1. Accordingly, amendments in CGST, IGST and SGST laws were initiated. Now, some States and UTs are yet to amend SGST, but whenever it is done, that will be made effective from October 1, 2023 only,” a top Finance Ministry official said.

Meanwhile, UTs and States such as Delhi and Goa on Saturday raised the issue of tax demand on online gaming companies and casinos retrospectively. The Revenue Secretary did not agree with them. “Certain members had raised the issue of retrospective taxation. It was informed to them that this is not retrospective, and this was the law earlier. These liabilities already existed because online money games were played with bets. They were already attracting (28 per cent GST) by way of betting or gambling,” he told reporters.

‘Unsafe environment’

Delhi Finance Minister Atishi said tax notices for the past six years, calculated at a much higher rate of 28 per cent, are being sent to online gaming companies, even thoughthis 28 per cent GST was to be implemented on October 1. “You are slapping a tax notice of ₹1.5 lakh crore on an industry whose revenue is ₹23,000 crore. This is to kill the industry. This shows an unsafe erratic investment environment in Indian start-ups,” Atishi said.

Malhotra further said that some States like Delhi and Goa raised the issue of online gaming companies facing GST demand notices for alleged evasion.

“There were discussions on charges (tax demand notice) on these companies, retrospectively. Because DGGI is an independent body, there cannot be any interference. The (GST Council) chairperson said she would make clarifications available to DGGI if required,” Chhattisgarh Deputy Chief Minister TS Singh Deo, also a member of the GST Council, said.

L Badri Narayanan, Executive partner at Lakshmikumaran & Sridharan Attorneys, said that the GST council has not provided any respite for ongoing investigations and SCN issued under the earlier regime. “Companies have no option but to knock at the doors of court on erroneous interpretation canvassed by the department.

The GST Council in its meetings in July and August had decided to clarify the levy of 28 per cent GST on the full face value of bets placed on online gaming platforms, horse racing and casinos.

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