Following the Interim Budget, Revenue Secretary Sanjay Malhotra, CBIC Chairman Sanjay Kumar Agarwal and CBDT Chairman Nitin Gupta spoke about how the industry has been contributing towards both direct and indirect taxes. They highlighted that GST collection from online gaming since October 2023 has surged, sixfold and the government expects to collect Rs 14,000 crores by the way of GST from the sector by next year. Additionally, it was also highlighted that the new Tax Deducted on Sources (TDS) framework for online gaming has yielded over ₹1,000 crore so far during the current fiscal. These recent announcements have underscored both the potential of the sector and the government’s strategic approach to taxation.
The tax collections have surged on the back of long deliberations by the GST Council and a Group of Ministers which has recommended amendments to rate and value of supply on GST on Online Gaming from October 2023. However, retrospective taxation for the period 2017 to September 2023 threatens to derail the GST gains that the government is witnessing. Multiple show-cause notices were issued to online gaming companies alleging tax evasion amounting to ₹1.12 lakh crore.
Addressing concerns over the retrospective taxation issue, Sanjay Malhotra, Revenue Secretary emphasized the government’s stance calling the adjustments prospective. He added “The dispute on the past GST dues is in the court, but going forward, there is no issue — all of them are paying 28%, and they are paying 28% on the actual value,” The Revenue Secretary acknowledged that the government has been able to tap the untapped potential of the online gaming industry.
Additionally, CBDT Chairman Nitin Gupta revealed that TDS from online gaming generated about mechanism ₹1,000 crore during the current fiscal. He further added that changes in law and 2023-24 Budget also helped in reducing disputes in online gaming.
CBIC Chairman Sanjay Kumar Agarwal said, “GST collections from online gaming has risen by as much as 400% to an average of Rs 1,200 crore per month since the new regime has kicked in from October 1, 2023.” This is against Rs 220 crore per month of GST that was being collected from the sector.
