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The Directorate General of GST Intelligence (DGGI) has raised a tax demand of ₹1.12 lakh crore against 71 online gaming companies. With penalties, this demand could increase to ₹2.3 lakh crore.
The tax notices are based on an August 2023 amendment to the Central Goods and Services Tax (CGST) Act, which introduced a 28% tax on the “full face value” of entry amounts in online gaming. The amendment was applied retrospectively in 2017, leading to the disputed notices.
In May 2023, the Karnataka High Court quashed a ₹21,000 crore tax notice issued to Gameskraft, a prominent gaming company. However, in September 2023, the Supreme Court upheld the High Court’s order, reviving the issue.
The gaming industry argues that the retrospective application of the tax amendment is unjust, while authorities maintain it is within legal bounds. The Supreme Court’s decision will have significant implications for the sector.