GST Enforcement Break for Online Gaming Industry, Casinos, and Racecourses Operating in India
The break began as a result of a directive from the Punjab Haryana High Court in September 2021.
The GST enforcement break for online gaming, casinos, and racecourses that operate in India continues. The break began as a result of a directive from the Punjab Haryana High Court in September 2021.
It’s good news for the growing number of online casinos that provide services to Indian players. You only need to look at the list of some of these online casinos to know that these are big brands, and they are keen to expand their reach in the country. While the break in GTI enforcement does not negate their financial obligations, it’s an important step in providing them with improved clarification regarding the rate and payment of GST throughout the online gaming, casino, and betting industries.
Punjab enforcement action follows Directorate General of GST Intelligence (DGGI) tax evasion notices
The current break in enforcement action was implemented following the Punjab Haryana High Court issuing of a stay order on enforcement of GST pending clarity from the GST Council regarding the rate and application of levies on racecourses, online gaming, and online casinos.
The original petition to the High Court was made by online gaming company WITZEAL after it faced a potential investigation and search enforcement. A similar case is ongoing in the Mumbai High Court as the result of a challenge from the online casino industry. This is not surprising given the fact that GST authorities had issued several notifications of search and survey action prior to the current break.
As a result of the order from the Punjab and Haryana High Court, no coercive action is currently permitted until clarification from the GST Council is forthcoming.
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Only time will tell when this clarification happens, but work is already underway to achieve it. The group of ministers that was originally set up in May 2021 to come up with recommendations regarding GST in the areas of online gaming and associated industry is continuing its work.
Eight-member group of ministers to advise
When the group of ministers was set up, under the leadership of Gujarat Dy CM – Nitin Bhai Patel, it was given a six-month timescale to deliver its recommendations. The group was then reconstituted in June 2021 and its work continued.
Recently, the membership of the group has been changed. However, it’s role to provide recommendations remains. This is an ever more vital task given the legal challenges to GST enforcement and the current break in any coercive action.
It remains to be seen when the group will provide its final recommendations and what they will be. It could be that the rates and payment of GST on racecourses, online gaming, and online casinos will change, or that different rates will be applied to different industries.
All interested parties await final clarification which will help them to plan the way forward. In the meantime, they have a welcome break from any enforcement action being taken by the GST authorities.
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