The online gamers have decided to approach the court. Recently major online gaming companies received hafety notices from the department. The total amount of this litigation is expected to the tune of 1,50,000 crores. But the online gaming companies are denying the liability. They are saying that the applicability of rate is retrospective.
In the past the tax rate on online gaming was increased to 28%. This was decided in GST council meeting. Earlier the department lost the cases against the Dream 11 and Gameskraft technologies. The court in these cases said that they are games of skills and not the game of chance. Thus the government had to increase the rate on online gaming because it was not falling in betting and gambling where the tax rate was already high.
There is one more issue related to valuation. These companies booking revenue of their cut in the game and not on the whole amount of betting. But here the department wants to taxthe whole amount of bets placed by various players. This will increase the amount of revenue multifold. But the companies are not charging any taxon it fromthe payers. If this demand is confirmed retrospectively, it may result in insolvency of these companies as they wont be able to recover this amount from the users in past.
