Tag: gst

Betting-Based Online Gaming Firms Said to Face Rs. 1 Lakh Crore GST Notices

India’s online gaming industry has received show-cause notices amounting to Rs. 1 lakh crore say sources. The notices come even as the industry has raised concerns on the applicable GST Rates.

The government has asserted that a 28 percent GST rate should have been in place starting from October 1, as per the law.

In August 2023, the GST Council amended the law, making it explicit that all online games involving bets, regardless of skill or chance, would be subject to a 28 percent GST rate on the full value of the bets placed, effective from October 1. This clarification aimed to close any potential loopholes.

The Central Board of Indirect Taxes and Customs (CBIC) Chairman, Sanjay Agarwal, announced India’s preparedness to implement this 28 percent GST rate on online gaming, following consensus among all Indian states. The amendments to GST laws in the Lok Sabha paved the way for this taxation shift.

During its last monsoon session, the Lok Sabha passed amendments to two Goods and Service Tax (GST) laws. These amendments primarily aimed to introduce a 28 percent GST rate for online gaming, casinos, and horse racing.

The amendments align with the GST Council’s resolution from August 2, which aimed to streamline the taxation of online gaming, casinos, and horse racing.

Furthermore, to ensure compliance, the GST Council recommended adding specific provisions to the Integrated Goods and Services Tax (IGST) Act, 2017.

These provisions encompass the liability to pay GST on the supply of online money gaming from foreign suppliers to Indian customers, along with measures to address non-compliance.

The valuation of online gaming and actionable claims in casinos will be based on the amount paid or payable to the supplier, excluding previous winnings, ensuring a consistent and clear approach to taxation.

India’s endeavour to tax online gaming falls within the broader efforts to bring various sectors under the GST framework, ultimately aiming to streamline tax collections and clarify tax rates for these growing industries.

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Hike Lays Off Over One-Fifth of Workforce Due to GST Raise on Online Gaming

Kavin Bharti Mittal-founded Hike, which owns Rush Gaming Universe, has laid off about 55 people — more than one-fifth of its total workforce — to absorb the impact of the GST hike on online gaming, a top company official said on Thursday.

The development comes within a week of gaming unicorn Mobile Premier League (MPL) laying off about half of its India team or close to 350 people to cut down cost burden due to the increase in GST to 28 percent.

“About 55 people, out of which 24 are non-full-time employees. Closer to 22 percent. Business is in the best shape ever but this 400 percent increase in GST is a bazooka pointed at us. We’ll need to absorb some of it and as a result the reduction in workforce at Hike/Rush,” Hike Founder and CEO Kavin Bharti Mittal said.

The entire team of Hike is engaged in the development of Web3 gaming platform ‘Rush Gaming Universe’.

Investors in Hike include Tencent, Foxconn, Bharti Group, Tribe Capital, Polygon, Flipkart co-founder Binny Bansal, serial entrepreneur Bhavin Turakhia, Cred Founder Kunal Shah.

The gaming platform claims to have 5.2 million monthly active users and distributed over $308 million (nearly Rs. 2,545 crore) to winners annually.

A couple of small-size gaming start-ups like Quizy have announced to shut down their business.

Industry body All India Gaming Federation (AIGF) in a statement early this week said that with over 400 percent increase in GST liability, a vast majority of entrepreneurs who had innovated in the sector would be disproportionately impacted with many of MSMEs and startups going out of business. 

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India Seeks Info on Coins Listed for Trade on Exchanges as Tax Body Mulls Levying GST

India’s Central Board of Indirect Taxes and Customs (CBIC) has reached out to a bunch of crypto exchanges operating in the country. The body is seeking lists of all the cryptocurrencies that are being traded on the exchanges in India. The tax authority of India is reportedly evaluating if the goods and services tax (GST) can be levied on the taxability of crypto transactions. The government body is also working to determine a concrete classification category to position crypto assets under.

By the end of November, the CBIC has reportedly asked crypto exchanges to provide all the necessary information.

“We had meetings with crypto exchanges on wide-ranging issues relating to the asset class. We have sought a detailed report on different crypto products being traded and their respective transaction fees and how they are getting calculated,” media reports have quoted people familiar with the matter as saying.

The process is expected to better determine the crypto transacting trends that are catching pace in the Indian fintech market.

The Indian government brought cryptocurrency under its tax regime earlier this year. All income churned from crypto transactions are being taxed at 30 percent since April and a 1 percent tax deducted at source (TDS) for crypto transactions has also been live in India since July.

The taxes have failed to make the crypto community happy in India. Recently, a Bengaluru-based tea seller who enabled crypto payments told Gadgets 360 that at this point, he is not seeing any profits on his crypto earnings.

Now, India will be taking up the presidency of the G20 group and will continue to preside the international union for the next one year, starting in December. As per Finance Minister Nirmala Sitharaman, India is looking to work with the other 19 member nations of the G20 in formulating a framework around cryptocurrencies, that would work on an international level.

Since cryptocurrencies are not governed by any central bank or a regulatory body, they are often misused for transferring large amounts of money to cross border locations, under a shroud of anonymity. In her speech at the recent press briefing, the Finance Minister noted that the use of crypto in money laundering is a problematic issue linked with digital assets.

Despite its reluctance to experiment with cryptocurrencies, India is keen on exploring the potential of blockchain technology. The Reserve Bank of India (RBI) is launching the pilot for a central-bank-backed digital rupee CBDCon Tuesday, November 1. A total of nine banks, including top lender State Bank of India have been picked to participate in the project.

The pilot’s use case will be to settle secondary market transactions in government securities, with the e-rupee expected to make the interbank market more efficient, the RBI said in a statement.

“The launch of CBDC will require a robust crypto security infrastructure in India to ensure hack proof CBDC operations and prevent financial frauds. Once implemented, the transaction volumes for CBDCs can go through the roof. The CBDC infrastructure should be a resilient environment that can operate 24×7 with zero downtime and at the same time protect the sensitive personal data of billions of its potential users,” Manan Vora, Senior Vice President- Strategy and Operations, Liminal told Gadgets 360.

Back in September, India secured the fourth rank on the 2022 Global Crypto Adoption Index compiled by blockchain research firm Chainalysis. With this, India surpassed Russia and the US on the index, hinting that the Indian crypto community is not very far behind in driving more adoption of the technology.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article. 

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