In a potential relief to the online gaming sector, the Goods and Services Tax (GST) Council is likely to consider an amendment to the Central Goods and Services Tax (CGST) Act, 2017, that would quash retrospective tax demands. This proposal, suggested by the law committee, aims to address tax notices issued where lower taxes were paid due to interpretation issues or lack of clarity in the law.
According to an Economic Times report, the law committee has recommended the introduction of a new Section 11A to the CGST Act. This section would empower the government to refrain from recovering GST that was not levied or was under-levied due to prevalent general practices.
The GST Council is set to deliberate on this recommendation at its upcoming meeting on June 22. If approved, this amendment would enable authorities to quash tax demands raised retrospectively, offering significant relief to the online gaming industry.
However, the amendment does not address the issue of overpaid taxes. Companies that have paid excess GST due to these practices will not be eligible for refunds.
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.
The proposed legislative change is seen as a crucial step in providing clarity and relief to businesses navigating the complexities of the GST regime.
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