TAX NOTICE TO ONLINE GAMING COMPANIES
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Context: The Indian government has issued show-cause notices amounting to ₹1 lakh crore to multiple online gaming companies for alleged tax evasion.
- The notices were sent by the Directorate General of Goods and Services Tax Intelligence (DGGI) to over 100 online gaming applications operating in India.
- The companies are accused of underpaying taxes, and the government has taken action to recover the alleged evaded amount. These allegations are centred around the 28% Goods and Services Tax (GST) on the full value of bets placed on online gaming platforms, which was imposed in August.
- The imposition of a 28% GST aims to bring online gaming platforms under the purview of the GST framework and ensure they pay taxes in accordance with domestic law.
- The amendments to the integrated GST made it mandatory for offshore online gaming platforms to register in India and comply with tax regulations. This move is intended to ensure that both domestic and foreign gaming companies operating in India are subjected to the same tax rules.
- The lack of data on foreign gaming companies registering in India since October 1 suggests that compliance with these new tax regulations may be a challenge for some offshore companies.
- This crackdown on tax evasion is part of a broader effort by the Indian government to regulate the online gaming industry. Online gaming has seen rapid growth in India, and the government is keen on ensuring that it is properly regulated and taxed
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