Gst on  online Gaming: Karnataka HC quashes SCN of Rs.21000 Crores against Gameskraft

The Single Bench of Justice S R Krishna Kumar quashed the impugned Goods and Services Tax (GST) Show-Cause Notice (SCN) against the petitioner Gameskraft which had imposed Rs. 21,000 Crore at 28% GST on online gaming services provided to gamers.

The decision will provide clarity on whether the government’s stance on imposing a 28% GST on the entry fees of online real money skill games is correct. This judgment is of significant importance to the entire online gaming industry.

Last year, in August 2022, the GST Intelligence unit issued a show cause notice to Gameskraft, seeking Rs 20,989 crore in taxes for the period between August 2017 and June 2022. According to the notice, the GST department considered Gameskraft’s services as betting and gambling and thus subject to 28% GST under Rule 31A of the CGST Rules, 2017.

In addition, the tax department alleged that the company did not issue invoices to its customers, which directly violates Section 15(3) of the CGST Act, 2017.