e-gaming companies might face tax demand of Rs 1.5 lakh crore

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The total tax demand on e-gaming companies might climb to a height of Rs 1.5 lakh crore, claimed a report in the Business Standard, quoting officials who came up with the estimate after the Directorate General of GST Intelligence (DGGI) slapped evasion notices on real money gaming companies alleging tax evasion. The tax demands are following the decision of the GST Council to slap 28% GST – the highest slab – on online gaming companies, casinos and horse racing – in early August. Some of the firms facing tax evasion charges have decided to fight it out through the legal route. The fantasy gaming platform Dream11 is one of them. Dream11, Games24X7 and MPL are three gaming unicorns in the country. While the first two have already been serviced with pre-show cause notices, MPL might receive it within the next few days, the report claimed. Dream11 has reportedly received a GST demand varying between Rs 25,000 crore and Rs 40,000 crore. The demand on Games24x7 has got a communication stating dues worth Rs 20,000 crore. Another company, Head Digital Works, has been dispatched a notice to recover alleged dues of Rs 5,000 crore. Incidentally, in September 2022 Gameskraft was served with a notice to clear dues of Rs 21,000 crore of GST. The Supreme Court is now hearing that case. “Most of the major gaming players are expected to receive a notice in the coming week. The total GST dues might exceed 1.5-2 trillion… The government expects companies to pay as much as 20 per cent of the dues at the beginning. A failure to pay might see some of the executives do jail time as well,” an executive of a large gaming firm who requested anonymity told the newspaper. To put figures in perspective, the amount Rs 1.5 lakh crore is a full months GST collection in the entire country. In August 2023 an amount of Rs 1.59 lakh crore was collected as gross GST in the entire country. Since the GST Council announced its decision to tax the domain at 28%, companies have been alleging that it will virtually kill the industry, lead to closure of firms and throw thousands out of employment. Several firms have already begun shedding staff. Many experts have also said that stymieing this industry would lead to proliferation of illegal gaming and gambling avenues.