Ashneer Grover, co-founder of BharatPe, said on Tuesday, September 26, that an alleged Rs 55,000-crore Goods and Services Tax (GST) demand from online gambling companies will not help India attain its goal of being a $5-trillion economy. Grover is the founder of the fantasy game app Crickpe.
Grover stated on the X platform (previously Twitter) that “na koi tax dega, na sarkar ko milega” (no one will pay tax, and the government will not receive any). If this massive tax notice is accurate, he claims only lawyers will benefit.
“Rs 55,000 crore GST demand! What do the officials think while sending the notices? The only explanation is – nothing. It’s just Monopoly. Neither will anyone pay tax nor will the government receive it. Only the lawyers will be benefitted due to such notices. Just another day of harassing businessmen,” Grover wrote on X.
₹55,000 crore GST demand ! I am intrigued ki Tax vaalo ke dimaag mein kya chalta hoga aise notice bhejte samay. The only explanation is – kuchh nahi. Monopoly ki game chal rahi hai bas. Na koi tax dega itna – na Sarkar ko milega. Milegi sirf vakilo ko fees jo SC mein ise… pic.twitter.com/BB1b9g3R4E
— Ashneer Grover (@Ashneer_Grover) September 26, 2023
The Directorate General of GST Intelligence (DGGI) is said to have issued a dozen pre-show cause letters to online real money gambling enterprises for alleged Rs 55,000 crore GST evasion. According to The Economic Times, which cited sources with knowledge of the situation, a GST notice worth over Rs 25,000 crore was sent to fantasy sports portal Dream11, led by Harsh Jain, making it arguably the highest indirect tax notice served in the country. The pre-show cause notifications have also been served on Play Games 24×7 and its affiliates, as well as Head Digital Works.
“This is called ‘retrospective tax’. Today they issued a notification that you were supposed to pay 28% tax since inception. Congress had a Vodafone retrospective tax – and BJP had a Gaming GST retrospective tax. Lot changes and sometimes nothing changes,” posted Grover asking the Finance Ministry to look into the case.
The notices were delivered following the GST Council’s decision to apply a 28% GST on the whole face value of bets at the entry level on online gaming. Delta Corp, a casino operator, received tax notices totalling Rs 16,822 crore from the Directorate General of GST Intelligence on Friday, September 22. This demand runs from July 2017 through March 2022.
Delta Corp has received one notice for Rs 11,140 crore. Another notice was issued for Rs 5,682 crore against three of its subsidiaries: Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruises.
Delta Corp stated that the GST notice is based on gross bet value rather than gross gaming value. It stated that it would seek legal recourse to fight this order. It has also stated that such tax requests are an industry-wide occurrence rather than a company-specific issue.
“Demand of GST on gross bet value, rather than gross gaming revenue, has been an industry issue and various representations have already been made to the Government at an industry level in relation to this issue,” the company stated in a filing with the stock exchange.
According to reports, more than 40 skill-gaming companies are being probed for GST evasion. The letters came just weeks after Finance Minister Nirmala Sitharaman stated that internet gaming, casinos, and horse racing would all be taxed at the same 28% rate. She indicated that the tax will be levied on the face value of bets placed (in the case of online gaming and horse racing) and chips purchased (for casinos), with no distinction made between skill and chance activities. It was later stated that the 28% was to be levied on the first deposit, not the Contest Entry Amount (CEA) or each bet.
Many more notifications are expected in the near future. MPL laid off 350 employees shortly after the GST Council’s vote to raise GST, Spartan Poker laid off 40% of its total workforce last month, real money gambling startup Quizy ceased operations, and Fantok ceased operations. According to reports, Gameskraft has also withdrawn its fantasy offering, Gamezy Fantasy.
