GST Council Meet: Retrospective tax demand on online gaming companies may be quashed

In some relief to the online gaming companies, the retrospective tax demands may be quashed as a key panel under the GST council has mooted amendment to the GST Act, reported The Economic Times. As per the report, tax notices in cases where the lower tax was paid due to interpretation of law or lack of clarity can be quashed

Retrospective taxation means, the government could impose and collect tax on a transaction or a deal that occurred in the past.

GST on online gaming firms

The GST council at its upcoming meeting on June 22 could take a call on the recommendation. By introducing a new section 11A in the legislation, the law committee has suggested amendment to the Central Goods and Services Tax (CGST) Act, 2017.

The proposed amendment seeks to empower the government to "not recover the GST not levied or short-levied as a result of general practice". This is expected to allow the authorities to quash the tax demand raised with the retrospective effect.

However, this does not allow refund of overpaid taxes, as companies cannot claim refunds for any excess GST paid due to these practices.

In the financial year 2023-24, the Directorate General of Goods and Services Tax Intelligence (DGGI) detected 6,323 cases of tax evasion amounting to Rs 1.98 lakh crore. Of these, the online gaming sector had the highest number of tax evasion notices, totaling over Rs 1 lakh crore.

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