In a potential relief for the online gaming sector, the Goods and Services Tax (GST) Council is expected to consider an amendment to the Central Goods and Services Tax (CGST) Act, 2017, that would nullify retrospective tax demands. This proposal, suggested by the law committee, aims to address tax notices issued due to lower taxes being paid because of interpretation issues or lack of clarity in the law.
According to an Economic Times report, the law committee has recommended introducing a new Section 11A to the CGST Act. This section would give the government the authority to refrain from recovering GST that was not levied or was under-levied due to common 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 retrospective tax demands, providing 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.
