Decoding government’s tax math for online gaming players

Posted under: Extended Reality
Date: 2023-10-05
Decoding government’s tax math for online gaming players

The Directorate General of GST Intelligence (DGGI) has issued show cause notices to real-money gaming platforms, seeking substantial GST payments on bets placed since 2017. The DGGI has calculated GST dues based on the actual bets placed on these platforms. For instance, Dream11 is facing a GST of over ₹28,000 crore on bets worth ₹1 lakh crore, while Games24x7 Pvt Ltd and affiliates owe over ₹20,000 crore on bets of ₹71,000 crore. GST is levied on every bet placed, so even if an individual makes multiple bets totaling ₹100, 28% GST is applied each time. This method could result in a yearly tax liability increase of 1,300-1,400%, far higher than the current 18% commission on player deposits. The real-money gaming industry is concerned about the potential financial burden, especially as interest at 18% and penalties may apply if the adjudicating authority supports the GST claims. Companies can appeal these claims, but it requires paying 10% of the claimed amount, up to ₹100 crore.