The chairman of India's Central Board of Indirect Taxes and Customs, Sanjay Kumar Agarwal, said on September 28 that show cause notices issued to e-gaming companies for alleged Goods and Services Tax evasion were issued as per legal provisions, and that the tax demanded is based on analysis of data1. He spoke to reporters in New Delhi1.
- Gameskraft received a notice for recovery of Rs 21,000 crore GST, later quashed by the Karnataka High Court1
Agarwal said the government is fully prepared to implement, from October 1, amended provisions levying 28% GST on online gaming, casinos and horse racing, along with mandatory registration of offshore online gaming platforms1. The GST Council approved the amendments at meetings in July and August, classifying these supplies as taxable actionable claims and clarifying that they attract 28% GST on full bet value1. Parliament passed amendments to the Central GST and Integrated GST laws last month1.
"The show cause notice which is going is as per legal provision... The department is taking a uniform stand in the interpretation of the law and accordingly show cause notices are being issued"
Asked about the total tax due from these companies, Agarwal said it was difficult to state a figure because there are many companies, and that data is being collected and notices issued wherever data is received1.
Two notices carry specific amounts. The notice served on casino operator Delta Corp last week was for alleged short payment of taxes worth Rs 16,800 crore1. In September last year, online gaming company Gameskraft received a similar notice for recovery of Rs 21,000 crore GST; the company approached the Karnataka High Court, which quashed the notice1. The revenue department filed a Special Leave Petition in the Supreme Court in July over that ruling, with the next hearing listed for October 101.
| Company | Notice | Amount |
|---|---|---|
| Delta Corp | Served last week (as of September 28, 2023) | Rs 16,800 crore |
| Gameskraft | September 2022 | Rs 21,000 crore |
Agarwal said online gaming, casinos and horse racing have been subject to 28% tax since the inception of GST, and that the GST Council decided the amended provision classifying these supplies as actionable claims would come into effect from October 11. A review of the implementation was proposed after six months, in April 20241.
The finance ministry has yet to notify the appointed date for the clarificatory amendments, and some states are yet to pass amendments to their state GST laws1. About a dozen states have passed the amendments in their assemblies, while a similar number are understood to have brought in an ordinance to allow implementation from October 11. Agarwal said it is necessary for all states to pass the law or issue an ordinance by September 30, and that related notifications are under process1.
What it means for players
The tax is levied on the full bet value, not on the platform's commission or gross gaming revenue, so the 28% applies to the entire amount wagered1. Operators have received notices demanding tax calculated on that basis for past periods, with the two disclosed demands running into thousands of crores of rupees1. Offshore online gaming platforms face mandatory registration1. The legal position on past periods is not settled: the Karnataka High Court quashed the Gameskraft notice, and the revenue department's appeal is pending in the Supreme Court1. For background on how gambling is regulated in the country, see Can I Gamble in India? and Gambling Laws in Asia: What Is Legal in 12 Jurisdictions.
What happens next
The amended provisions are due to take effect from October 1, subject to states passing amendments or ordinances by September 30 and the finance ministry notifying the appointed date1. A review of implementation is proposed after six months, in April 20241. The Supreme Court is listed to hear the revenue department's petition in the Gameskraft case on October 101.
