The All India Gaming Federation (AIGF) has expressed concerns and called for the suspension of the 28 percent GST rates notification, which was scheduled to be implemented on online gaming companies from October 1. AIGF addressed a letter to Revenue Secretary Sanjay Malhotra, highlighting the need to suspend the amendment notice until all states align their amendments with the Supreme Court of India’s judgment.

The AIGF’s request is grounded in the fact that around 15 states have yet to make the necessary changes to their state GST laws. This lack of uniformity in the statutory framework can pose challenges for online gaming companies registered in these states. The federation emphasized that the central government’s notification could set a precedent for unilateral actions by various states in other aspects of GST in the future.

The letter points out that the foundation of GST laws is built on the principle of simultaneous taxing powers between the central government and the states, as outlined in Article 246A of the Indian Constitution. This principle implies that both the central government and the states should concurrently enact laws for GST taxation, rather than acting unilaterally.

The concern also revolves around the ability of online gaming companies to charge the appropriate GST. Since amendments to State GST laws are pending, these companies may only be able to charge CGST and not SGST. The AIGF has raised the question of whether online gaming companies would face penalties for their inability to levy the correct GST.

Additionally, the AIGF has highlighted the operational challenges that businesses would encounter in adapting to substantial changes without statutory framework uniformity.

In recent weeks, GST authorities have issued notices of tax evasion to several online gaming companies. A high-profile case involved fantasy gaming company Dream 11, which filed a writ petition in the Bombay High Court challenging a GST notice alleging GST evasion.

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