Finance Ministry on Monday informed the Lok Sabha that GST evasion of around ₹23,000 crore was being investigated by taxmen. However, it decline to give details about Income Tax Department citing confidentiality of assesses.
“So, far as evasion of Goods and Services Tax (GST) is concerned, CBIC formations have initiated investigations against some gaming companies (including Online gaming companies) located in India as well as abroad. The estimated evasion of GST by these companies works out of ₹22,936 crores, relating to the period April 2019 to November 2022,” Minister of State for Finance Pankaj Chaudhary said in a written reply.
The issue of levying GST on online gaming has been a contentious issue. There is a two-tier rate structure for online gaming — 18 per cent for games of skill and 28 per cent for games of chance. Most online gaming companies levy GST at 18 per cent, claiming it is a game of skill contrary to the GST Department’s claim. These claims and counter-claims have been subject to litigation.
On December 6, businessline reported that CBIC will initiate action against online gaming companies, based on its investigation, after the Karnataka High Court decides on a challenge petition filed by Bengaluru-based Gameskraft. “Online gaming is mainly game of chance and, accordingly, it will attract GST at 28 per cent. are investigating online gaming companies and it will continue. However, we would like to wait for Karnataka High Court ruling before initiating any action such as issuance of show cause notice,” a senior government official said.
In September, Bengaluru-based online gaming company Gameskraft Technologies challenged the show cause notice issued by the Directorate General of Goods and Services Tax Intelligence (DGGI) for a tax demand of over ₹21,000 crore. The official said that hearing in the matter has been completed with submission by both parties, and the court has reserved its order, which is expected any day.
Meanwhile, Chaudhary also said that the Directorate of Enforcement is investigating several cases related to Cyber & Crypto assets frauds where online gaming, etc., have been used for committing fraud and siphoning the proceeds.
“In these cases, as on December 6, proceeds of crime of more than ₹1,000 crore have been attached/seized / freezed under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA). Also, 10 Prosecution Complaints (PCs) including 02 supplementary PCs have been filed before the Special Court, PMLA. Further, assets amounting to ₹289.28 crores have been seized under section 37A of Foreign Exchange Management Act, 1999,” he said.
Income Tax
However, Chaudhary said the information regarding online Gaming companies, which are not paying income tax and where the Income tax Department has issued notices to such gaming companies, is not available, since no specific identification code for online gaming entities is available in Income Tax Return. The disclosure of information about specific taxpayer is prohibited except as provided under section 138 of the Income Tax Act, he said.