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Online Gaming Companies Face Rs 1 Lakh Crore GST Notices

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The government has asserted that a 28 per cent GST rate should have been in place starting from 1 October

India’s online gaming industry has received show-cause notices amounting to Rs 1 lakh crore say sources. The notices come even as the Industry has raised concerns about the applicable GST rates.

The government has asserted that a 28 per cent GST rate should have been in place starting from 1 October, as per the law.

In August 2023, the GST Council amended the law, making it explicit that all online games involving bets, regardless of skill or chance, would be subject to a 28 per cent GST rate on the full value of the bets placed, effective from 1 October. This clarification aimed to close any potential loopholes.

The Central Board of Indirect Taxes and Customs (CBIC) Chairman, Sanjay Agarwal, announced India’s preparedness to implement this 28 per cent GST rate on online gaming, following consensus among all Indian states. The amendments to GST laws in the Lok Sabha paved the way for this taxation shift.

During its last monsoon session, the Lok Sabha passed amendments to two Goods and Service Tax (GST) laws. These amendments primarily aimed to introduce a 28 per cent GST rate for online gaming, casinos and horse racing.

The amendments align with the GST Council’s resolution from August 2, which aimed to streamline the taxation of online gaming, casinos, and horse racing.

Furthermore, to ensure compliance, the GST Council recommended adding specific provisions to the Integrated Goods and Services Tax (IGST) Act, 2017.

These provisions encompass the liability to pay GST on the supply of online money gaming from foreign suppliers to Indian customers, along with measures to address non-compliance.

The valuation of online gaming and actionable claims in casinos will be based on the amount paid or payable to the supplier, excluding previous winnings, ensuring a consistent and clear approach to taxation.

India’s endeavour to tax online gaming falls within the broader efforts to bring various sectors under the GST framework, ultimately aiming to streamline tax collections and clarify tax rates for these growing industries. (ANI)                  

 

 

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Godrej Landmark Redevelopers Receives GST Demand, Penalty Worth Rs 258.78 Cr

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GPDL will contest the ruling in the proper court, in accordance with the law, and there will be no material impact on the company’s finances, operations, or other activities as a result of this, the company stated in a filing

Godrej Landmark Redevelopers (GLRPL), now merged with Godrej Projects Development (GPDL), received GST demand of Rs. 129.39 crore along with interest and a penalty of Rs 129.39 crore.

The order relates to a project that GLRPL developed in Mumbai and involves alleged GST non-payment. “GPDL will contest the ruling in the proper court, in accordance with the law, and there will be no material impact on the company’s finances, operations, or other activities as a result of this,” the company stated in a filing.

Godrej Redevelopers (Mumbai) (GRMPL), another of its subsidiaries, had received a recent order for a GST demand of Rs 48.31 crore coupled with interest. The ruling allegedly related to one of the projects produced by GRMPL in Mumbai and concerned the non-payment of GST.

Additionally, Godrej Properties’ allocation of two neighbouring plots in Sampada, Navi Mumbai, had been revoked by CIDCO. However, the company has appealed the cancellation decision by submitting a writ petition to the Bombay High Court. “Based on the company’s assessment and prevailing law, the Company reasonably expects a favourable outcome given the current legal position,” the regulatory statement stated.

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Dabur Receives GST Demand Notice Of Rs 320.60 Cr

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The impact will be limited to the extent of final tax liability as may be ascertained along with interest and penalty, if any, the company clarified

Dabur received a GST demand notice for a total of Rs 320.60 crore, it reported on Tuesday. The Company has been notified of the tax due under Section 74(5) of the CGST Act of 2017, and that it is required to pay GST that has been underpaid or not paid of the amount of Rs 320.60 crore, as well as any applicable interest and penalties, in order to avoid receiving a Show Cause Notice, the company stated.

The company responded by saying that, as stated in a regulatory declaration by Dabur India, it will oppose this notification with a strong justification and submit its answer to the relevant authorities. “The impact will be limited to the extent of final tax liability as may be ascertained along with interest and penalty, if any,” it stated.

The company, which is the owner of popular brands like Dabur Chyawanprash, Dabur Honey, Dabur Honitus, Dabur PudinHara, and Dabur Lal Tail, asserted that the change will not affect the company’s finances, operations, or other operations. Dabur India’s stock rose 0.55 percent on Tuesday to close at Rs 540.05 on the BSE.

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GST Authority Fines LIC For Lower Payment of Taxes

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According to a notice from the State Taxes Officer in Srinagar dated 9 October 2023, LIC paid 12 per cent GST rather than 18 per cent on a few invoices

Life Insurance Corporation (LIC) has been fined Rs 36,844 by the GST authority for underpaying taxes, LIC said in a regulatory filing.

It also stated that company has received a communication/demand order for the state of Jammu and Kashmir’s GST collection as well as interest and penalties. The tax office has issued a demand order/ penalty notice for 2019–20, which includes interest and penalties totaling Rs 6,382 and Rs 10,462 for GST.

According to a notice from the State Taxes Officer in Srinagar dated 9 October 2023, LIC paid 12 per cent GST rather than 18 per cent on a few invoices.

The company also cleared that fine would not have any material impact on financials, operations or other corporate activities.

LIC’s poor performance persisted in the month of September as well. It reported a 27 per cent drop in new business premiums (NBP), notwithstanding growth recorded by private insurers.

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Gross Direct Tax Collections Rise 18% This Fiscal

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Direct tax collection, net of refunds, stood at Rs 9.57 lakh crore which is 21.82 per cent higher than the net collections for the same period of last year

 
 
 

A total of Rs 11.07 lakh crore (gross) worth of direct taxes have been collected so far in the current financial year 2023-24, representing a 17.95 per cent increase on a yearly basis, Central Board of Direct Taxes Chairman Nitin Gupta said on Tuesday.

The provisional figures of direct tax collections were up to 9 October.

Direct tax collection, net of refunds, stood at Rs 9.57 lakh crore which is 21.82 per cent higher than the net collections for the same period of last year.

This collection, according to the CBDT, is 52.50 per cent of the total Budget estimates of direct taxes for for the nancial year 2023-24.

As far as Corporate Income Tax (CIT) and Personal Income Tax (PIT) in terms of gross revenue collections are concerned, the growth rate for CIT is 7.30 per cent while that for PIT is about 29 per cent.

“Refunds amounting to Rs 1.50 lakh crore have been issued during 1 April 2023 to 9 October 2023,” the CBDT chairman said.

Over the last few years, various efforts have been made to increase the tax base and improve compliance.

In the entire financial year 2022-23 for example, the total gross GST collection stood at Rs 18.10 lakh crore and the average gross monthly collection for the full year is Rs 1.51 lakh crore. The gross revenues in 2022-23 were 22 per cent higher on a yearly basis.

Notably, in April this year, the gross GST collection was at an all-time high of Rs 187,035 crore. (ANI)  

 

 

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Reliance General Insurance Faces Rs 922.58 Cr GST Show Cause Notices

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This development centres on a range of GST-related issues, including the applicability of the tax on re-insurance commission and co-insurance premiums

 

Reliance General Insurance Company (RGIC), a subsidiary of Reliance Capital Ltd, has been served with multiple show cause notices, totaling a staggering Rs 922.58 crore, by the Directorate General of GST Intelligence (DGGI). 

This development, reported by PTI, centres on a range of GST-related issues, including the applicability of the tax on re-insurance commission and co-insurance premiums, as well as concerns about input tax credit (ITC) and non-payment of GST on the import of reinsurance services.

PTI sources indicate that RGIC received four separate notices from the DGGI, demanding sums of Rs 478.84 crore, Rs 359.7 crore, Rs 78.66 crore, and Rs 5.38 crore, respectively. These notices have substantial financial implications for the company.

The first notice, amounting to Rs 478.84 crore, pertains to the application of GST on re-insurance commission earned by RGIC from both Indian and foreign reinsurance companies. The GST Authority contends that this commission forms part of the company’s recorded revenue and, consequently, is subject to GST.

Another notice, totaling Rs 359.70 crore, raises questions about the GST applied to co-insurance premiums received by RGIC in co-insurance transactions. PTI reports that the company maintains that the lead insurer has already fulfilled its GST obligation on the entire premium, but the GST department disagrees, arguing against provisions allowing one registered entity to collect and disburse tax on behalf of another in co-insurance arrangements.

In the third notice, amounting to Rs 78.66 crore, the DGGI initiated an investigation into the alleged wrongful availing of ITC related to marketing expenses between July 1, 2017, and March 31, 2022. In response, PTI states that the company deposited Rs 10.13 crore under protest.

The fourth show cause notice, totaling Rs 5.38 crore, focuses on the non-payment of GST under the reverse charge mechanism for reinsurance services imported from foreign reinsurers concerning an exempted crop insurance scheme from July 2017 to January 2018.

These show cause notices come at a critical juncture for RGIC, given that it constitutes nearly 70 per cent of the total value of Reliance Capital, which itself is navigating a debt resolution process through the National Company Law Tribunal (NCLT). As a result, the company’s auditors are expected to include these amounts as contingent liabilities in their quarterly results for the period ending 30 September.

 

 

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Delhi Govt To Demand Withdrawal Of 28% Tax On Online Gaming: Atishi

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Union Finance Minister Nirmala Sitharaman is presiding over the 52nd GST Council meeting at the Sushma Swaraj Bhawan in New Delhi on Saturday

 
 
 

Ahead of the 52nd Goods and Services Tax (GST) Council meeting on Saturday, Delhi Finance Minister Atishi criticised the Centre over the imposition of 28 per cent tax on online gaming industry, adding that the Coucil should consider withdrawing the tax evasion notices on companies in the sector.

In an address ahead of the GST Coucil meeting, which is currently in progress in the national capital, Atishi said, “Despite the opposition of the Delhi government, a 28 per cent tax was imposed on the online gaming industry. Even before this tax was imposed, the GST Council sent tax evasion notices worth Rs 1.5 lakh crores to the online gaming industry over the last six years. I am going to take up this issue at the meeting today. Will demand the withdrawal of tax notices to the online gaming sector.”

She added that the online gaming is considered a “sunrise sector” but the decisions being made and implemented by the GST Council will significantly and negatively impact the industry.

“The online gaming sector employs over 50,000 people. Online gaming is considered a sunrise sector in the startup sector, but the GST Council recently took a decision to impose 28 per cent GST on online gaming. It will have a huge impact on this industry,” she added.

Union Finance Minister Nirmala Sitharaman is presiding over the 52nd GST Council meeting at the Sushma Swaraj Bhawan in New Delhi on Saturday.

The meeting is being attended by Union Minister of State for Finance, MP Poonia, along with Finance ministers of various States and Union Territories (with Legislature), as well as senior officials from both the Union government and the states.

The GST Council convenes periodically to deliberate on matters related to the GST regime, including tax rates, policy changes, and administrative issues.

The 52nd meeting is aimed at discussing critical issues affecting the Indian tax system and finding collaborative solutions.

The meeting outcomes are expected to have a significant impact on the country’s economy going forward.

It’s part of the government’s ongoing efforts to refine the GST system to enhance efficiency and promote economic growth.

The decisions and recommendations arising from the 52nd GST Council meeting will be closely watched by various stakeholders, including businesses, policymakers, and the general public, as they have the potential to influence taxation, trade, and overall economic dynamics in the country. (ANI)

 

 

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GST Council Considering Exempting Tax On Distilled Alcohol Used To Make Liquor: Report

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The council, chaired by the federal finance minister and includes state finance ministers, will also consider a proposal to lower GST on molasses to 5 per cent from 28 per cent

 

Goods and Services Tax (GST) Council will discuss exempting distilled alcohol used to manufacture liquor from the indirect tax at its meeting on 7 October, according to a source.

High distilled or extra neutral alcohol contains 95 per cent alcohol by volume and is used for producing liquor and for industrial purposes.

The council, chaired by the federal finance minister and includes state finance ministers, will also consider a proposal to lower GST on molasses to 5 per cent from 28 per cent, according to the source.

Molasses, a byproduct of sugar production, is used to make extra neutral alcohol and ethanol.

The reduction in GST on molasses will benefit the sugar industry, Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories, said.

“Especially those sugar mills that don’t have distilleries and sell molasses.”

India does not impose GST on liquor.

However, states adopt different practices while imposing GST on extra neutral alcohol, which is key input used to produce liquor.

According to the proposal, grain and molasses-based extra neutral alcohol used for manufacturing liquor will be exempted from GST for an “interim” period, the source said.

States which levy value added tax (VAT) on grain and molasses-based extra neutral alcohol used in industry may be asked to stop levying the VAT, according to the source.

 

 

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GST Panel Rejects Proposal For Reducing Tax On Tobacco Products

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According to reports, the industry has requested a consistent additional compensation cess on cigarettes, bidis, smokeless tobacco products, and/or lower compensation cess on cigarette sticks up to 70 mm

 

Ahead of the Goods and Services Tax (GST) Council meeting on 7 October, an officer’s panel of the Council has rejected industry proposals to reduce tax on tobacco products. 

The decision signifies a conscious choice by the Council to prioritise public health over the economic interests of the tobacco industry. According to reports, by maintaining higher tax rates on these products, the GST Council aims to dissuade individuals from purchasing and consuming tobacco, thereby reducing its overall prevalence and associated health risks. 

According to reports, the industry has requested a consistent additional compensation cess on cigarettes, bidis, smokeless tobacco products, and/or lower compensation cess on cigarette sticks up to 70 mm.

Suggesting the status quo, the Council’s Fitment committee has rejected the proposal.

When determining the Compensation Cess rates for tobacco and tobacco products, it was determined that the GST rate on cigarettes would remain at 28 per cent in accordance with the weighted average VAT rate of 28.7 per cent. Bidis are subject to a 28 per cent GST rate, however there is no corresponding Compensation Cess.

It may be recalled that in the Union Budget for FY24, the National Calamity Contingent Duty (NCCD) rate on specified cigarettes was raised by around 16 per cent with effect from 2 February, 2023.

 

 

 
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GST Collections Need To Exceed Rs 1.65 Tn/Month In H2FY24 To Meet CGST Target: Icra

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The integrated GST collected on imported goods declined by 0.2 per cent year-on-year (YoY) in September 2023 after rising by a muted 3.5 per cent in August 2023

 

India’s goods and services (GST) collections need to exceed Rs 1.65 trillion per month during H2FY2024 to meet the budget estimate (BE) for central GST revenues of Rs 8.1 trillion, which appears feasible at the current juncture, the rating agency Icra has said in a report.

Gross GST collections rose to Rs 1.62 trillion in September 2023 from Rs 1.59 trillion in August 2023. Moreover, such collections averaged at Rs 1.62 trillion in Q2 FY2024, slightly lower than that seen in Q1 FY24 (Rs. 1.69 trillion), while substantially exceeding the year-ago levels (Rs 1.47 trillion).  

Notably, the integrated GST collected on imported goods declined by 0.2 per cent year-on-year (YoY) in September 2023 after rising by a muted 3.5 per cent in August 2023; such collections have remained muted during H1 FY2024, in sync with the contraction seen in India’s merchandise imports amid the moderation in global commodity prices.

“Going forward, any contraction in the value of merchandise imports may continue to dampen the revenues from IGST, which is levied on an ad-valorem basis. Consequently, IGST settlement to CGST may also be impacted, given the substantial share of IGST on imported goods in total IGST (~48 per cent),” the report added.

The rating agency also stated that the YoY surge in direct taxes coupled with lower tax devolution led to a sharp uptick in net tax revenues in August 2023. The central government’s direct tax collections surged to Rs 1.7 trillion in August 2023 from Rs 0.3 trillion in August 2022, led by a multi-fold increase in personal income tax as well as corporation tax.

Moreover, while tax devolution in August 2023 (Rs. 0.73 trillion) was in line with the previous month, it was lower in YoY terms owing to the release of a double tranche in August 2022 (Rs 1.2 trillion), Icra added.

As a result, net tax revenues rose multi-fold to Rs 2.2 trillion from Rs. 0.3 trillion recorded in August 2022. This pushed up the YoY growth in net tax revenues to 14.8 per cent from April to August 2023, as against a contraction from April to July 2023.

“The GoI needs to release Rs. 6.4 trillion to the states during September-March FY2024 to meet the FY2024 BE (Rs 10.2 trillion), which is similar to the amount devolved during September-March FY2023 (Rs 6.3 trillion). This would aid in containing the incremental fiscal deficit in some of the ensuing months, as seen in August 2023,” it stated.

 

 

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