GST Council likely to cancel retro tax requests from online gaming firms

The online gaming industry may receive some relief as the GST Council is expected to discuss a change to the CGST Act, 2017, which would eliminate backdated tax claims. This suggestion, put forward by the law committee, seeks to deal with tax notifications sent out when lower taxes were paid because of misunderstandings or ambiguity in the law.

As per a report by the Economic Times, the law committee has suggested adding a new Section 11A to the CGST Act. This part of the law would give the government the authority to not collect GST that was not imposed or was under-imposed because of common industry practices.

The recommendation will be discussed by the GST Council at its meeting on June 22. If passed, this amendment would allow officials to eliminate tax claims made retroactively, providing important support to the online gaming sector.

Nevertheless, the amendment fails to tackle the problem of excessive tax payments. Businesses that have overpaid GST as a result of these tactics will not qualify for reimbursement.

During the fiscal year 2023-24, the Directorate General of Goods and Services Tax Intelligence (DGGI) uncovered 6,323 instances of tax fraud totaling Rs 1.98 trillion. Amongst these, the online gaming industry received the most tax evasion notices, amounting to a sum exceeding Rs 1 lakh crore.