The Director General of Goods and Services Tax Intelligence (DGGI) has slapped Bengaluru-based GameCraft Technologies (GTPL) with tax notices of up to 21,000 kroner for failing to pay GST on wagering amounts. The company calls the notice a “departure from established land law.”
Gameskraft Technology has been accused of facilitating online betting through card, casual and fantasy games such as Rummy Culture, Gamezy and Rummy Time.
This notice was delivered to gaming companies for transactions that occurred between 2017 and June of this year. The gaming platform allegedly submitted backdated invoices to tax authorities for tax evasion purposes.
The authorities imposed a 28% GST on the stake calculated to be around 77,000 kroner. They claim that the GTPL allows clients to place bets in the form of money on games they play online. It turns out that the company does not invoice customers for wagering amounts.
The company is said to be urging customers to keep betting because once the money was added to their wallets there was no way of returning it.
On Sunday night, a Gameskraft spokesperson said gaming of skill is a constitutionally protected activity based on Supreme Court and various High Court rulings. “Rummy is one of those games declared as skill games such as horse racing, bridge and fantasy games. As a responsible start-up company, we have waived our GST and income tax liability following standard industry practice of over a decade ago,” said a Gameskraft spokesperson. “We are confident that we will be able to respond to this notice to the full satisfaction of the authorities as they intend to apply the 28% tax applicable to games of chance and lotteries instead of the 18% applicable to online platforms. A skill game.”
The action comes at a time when the GST Council is reviewing taxation issues related to online games and has asked a high-level ministerial committee to make recommendations on the matter. The Board will meet next month to take up the Panel’s report on this issue.
The Commission is supposed to determine GST rates for online games, horse racing and casinos. We are also considering whether online games of skill should be treated differently than games of chance. The commission had previously recommended a 28% tax on gross gaming revenue for online games, but asked for more time to submit its final recommendations to the council.