Retro tax demand on online gaming companies may be quashed

In what could bring relief to the online gaming sector, a key panel under the goods and services tax council has mooted amendment to the GST Act to quash retrospective tax demands.

The GST Council at its upcoming meeting on June 22 could take a call on the recommendation.

As per the recommendation tax notices in cases where the lower tax was paid due to interpretation of law or lack of clarity can be quashed, people familiar with the development said.


The law committee has suggested amendment to the Central Goods and Services Tax (CGST) Act, 2017 via the introduction of a new Section 11A in the legislation.

The proposed amendment, which is part of the GST council's agenda, seeks to empower the government to "not recover the GST not levied or short-levied as a result of general practice".

This will allow authorities to quash the tax demand raised with the retrospective effect.

However, the amendment offers no relief for overpaid taxes, as companies cannot claim refunds for any excess GST paid due to these practices.

The Directorate General of Goods and Services Tax Intelligence (DGGI) detected 6,323 cases in financial year 2023-24 involving a tax evasion of ₹1.98 lakh crore in 2023, out of which online gaming companies have the maximum number of tax evasion notices, over ₹1 lakh crore.