Govt cracks down on offshore e-gaming apps, blocks many
时间:2024-06-02 05:26:39 阅读（143）
The government has started blocking the websites and apps of some offshore online gaming companies that have neither registered their businesses in India nor pay the Goods and Service Tax (GST), an official familiar with the development told FE.
“There are several offshore online gaming companies that haven’t got their businesses registered in the country, but are offering the services to Indian consumers and apparently generating revenue from it. This is in contravention of the law,” the official said.
Online gaming companies, whether based in India or outside, are mandated to pay GST at 28% on the entire face value of bets placed. Though a notification to this effect came into effect only on October 1 following GST Council decision in July, the government maintains that such tax liability existed even before it, and the matter is under judicial review.
Of course, the online gaming industry argues that the GST laws until the October amendment provided for only an 18% tax on gross gaming revenue or GGR (platform fee).
Finance ministry officials had said earlier that, the government was looking at various options to enforce the 28% tax on foreign gaming platforms, as a significant part of such services are being supplied from abroad. “Non-compliant firms would be barred from providing such services to Indian residents,” revenue secretary Sanjay Malhotra had said.
The blocking of the overseas gaming websites and platforms in India is in line with this stance.
According to the government, while responsibility of paying tax can be passed to online gaming companies located abroad, if they also fail to do so, then, it would amount to transgressing the law. The regulation of foreign platforms will be undertaken through the ministry of electronics and information technology (MeitY).
On December 5, minister of state for finance Pankaj Chaudhary had said that no overseas online gaming company had registered in India since October. Chaudhary had also mentioned that till October, 71 show cause notices involving GST to the tune of Rs 1.12 trillion have been issued to online gaming companies during financial years FY23 and FY24 (April-October).
Experts say that blocking of websites/apps are measures being used by the government to compel the offshore entities to comply with the domestic laws.
“The effectiveness of this approach might be contingent on cooperation from platform owners who host these online gaming applications. The government should aim to make these platform owners aware of defaulters and prevent access to apps from companies that do not comply with GST laws,” said Ankur Gupta, practice leader – indirect tax at SW India.
Sandeep Sehgal, Partner- Tax, AKM Global, however notes that some offshore companies may be working on a B2B model but the GST department could be of the view that the compliance is applicable on those offshore companies as well. Under the B2B model, GST is paid through a reverse charge mechanism by recipient of the online gaming service.
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