52nd GST Council meeting: States flag issue of ‘retrospective taxation’ on online gaming firms

Delhi Finance Minister Atishi said tax notices are being sent for a much higher amount than even the estimated valuation of the gaming industry.

States have raised the issue of notices for tax demand served under the Goods and Services Tax (GST) regime on gaming companies and others at the GST Council’s 52nd meeting Saturday, with some states terming it “retrospective taxation”.

The Council, in its meeting, also decided to provide clarification on differential tax treatment for alcohol for human consumption and industrial use and reduced the GST rate on molasses to 5 per cent from 28 per cent.

Chattisgarh Deputy Chief Minister T S Singh Deo said some states like Delhi and Goa raised the issue of online gaming companies receiving a spate of GST demand notices for alleged evasion.

“There were discussions on charges (tax demand notice) on these companies retrospectively. Because DGGI (Directorate General of GST Intelligence) is an independent body there cannot be any interference. The (GST Council) chairperson said she would make clarifications available to the DGGI, if required,” Deo said after the Council meeting

 

Delhi Finance Minister Atishi said tax notices are being sent for a much higher amount than even the estimated valuation of the gaming industry. “From October 1, this 28 per cent GST (on online gaming) was to be implemented. But tax notices for the last six years calculated at a much higher rate have been sent to online gaming companies.”

 “An industry whose revenue is Rs 23,000 crore, you are slapping a tax notice of Rs 1.5 lakh crore. This is to kill the industry. This shows an unsafe, erratic investment environment in Indian startups,” she said, adding that the Centre has not given any assurances on the taxation liability of gaming platforms and hoped it would be considered going forward.

Deo further said that extra neutral alcohol (ENA) for industrial use will continue to face GST, while alcohol for human consumption stays outside the purview of GST. “ENA (potable alcohol) for human consumption will be exempt from GST and the same will be communicated to the Supreme Court,” he said.

The tax rate on molasses, a by-product of sugarcane which is used as a raw material for alcohol production, has been reduced to 5 per cent from 28 per cent at present, Deo added.

Source::: THE INDIAN EXPRESS ,  dated 07/10/2023.