Retro Tax Waiver Set to Ease Gaming Cos’ ₹1Lcr Tax Pain

The Goods and Services Tax (GST) council’s recommendation to add an amendment to allow the government to overrule retrospective tax demands has the potential to resolve pending indirect tax cases running in the tunes of 1 lakh crore against companies in India’s cash rich real money gaming (RMG) sector, but is only the first step to resolving issues around such demands, senior lawyers and industry executives said.

The RMG sector has been under the spectre of possible retrospective tax payments that amount to multiples of their revenues. A number of firms like Gameskraft, Dream 11, Games 24×7 and Head Digital Works are facing cumulative demands for goods and services taxes (GST) of around 1 lakh crore, according to estimates. The power to overrule such pending taxes by the government could significantly reduce risks for such firms. However, lawyers and executives advised caution when welcoming the recommendation.

“This is only the first step as a provision for the government to overrule retrospective tax demands did not exist in the first place under the GST Act, and this is being recommended on a wide basis for all industries including airlines and telecom,” a senior lawyer in the industry said, declining to be identified.

The recommendation will likely see debate in the interim budget session before being brought into action, and a coalition government at the Centre means it won’t necessarily be smooth sailing, a senior executive at a RMG major said.

In case the recommendation is accepted into the act, the GST council will once again have to recommend the application of the new amendment to the RMG industry, which will entail further debate, the lawyer added. Meanwhile, a combined pending tax case against about 30 parties, including RMG firms like Gameskraft, Head Digital Works and Play Games 24×7 by the Director General of GST (DGGST) and other tax authorities in the Supreme Court continues, with the next hearing slated for July 15.

S-ET Image Source: Google

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