Retro GST: These days there is a lot of discussion in the country about retro GST. Especially online gaming companies are openly raising questions against the government regarding this. The matter is related to tax worth thousands of crores of rupees and it can affect the entire online gaming sector. The government is demanding the outstanding GST of last several years from some gaming companies. Companies say that it is not right to suddenly impose such a huge tax on the basis of old rules. Due to this the term retro GST has come into discussion.

After all, what is retro GST?

Retro GST means applying tax later on old transactions or collecting tax on old transactions in a new way. That means, if a company had worked as per any rule in 2018 or 2019, but later the government says that more tax should have been paid at that time, then it may have to pay the outstanding tax of the old years.

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Why did the case come against online gaming companies?

The government says that online gaming platforms should have paid GST not just on their commission or fees, but on the entire contest account. That means, if there is a contest of Rs 100 on any gaming app, then tax will be imposed not only on the company’s earnings but on the entire Rs 100. The controversy started from here. Till now many companies were paying 18% GST only on platform fees. But the government claims that they should have paid 28% GST on the entire account. For this reason, tax notices worth thousands of crores of rupees have been sent to many companies.

How many years old tax is being demanded?

According to reports, the government is demanding old taxes of up to 10 years from some companies. This means that old transactions are being investigated, interest and penalty are also being added, the total amount is reaching thousands of crores. Regarding this, companies are saying that this has become a case of retro taxation.

What is the problem with the companies?

Online gaming companies say that earlier the rules were not completely clear. The industry was paying GST in a different way for a long time. It is wrong to suddenly demand such a huge tax from old years. Companies also say that if such heavy tax has to be paid, many startups may be closed.

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What is the government saying?

The government’s stand is clear that online real money gaming will be considered like betting and gambling, hence 28% GST will be applicable on it. GST Council has already taken a decision on this. The government says that tax evasion will not be allowed and all companies will have to follow the rules.

What effect will this have on the common people?

If the heavy tax burden on gaming companies increases, it may directly impact the users as well. There is a possibility that entry fees may increase, winnings may reduce and many offers and cashbacks may be discontinued. Some small companies may also go out of the market. Well, now this matter has reached the court. Many online gaming companies have reached court regarding this matter. He says that the government cannot collect heavy taxes by interpreting the old rules differently. Now everyone’s eyes are on the next decision of the court and GST Council.