Online Gaming Industry Under Scrutiny Over Cashbacks

The online gaming industry is facing intense scrutiny from the Directorate General of GST Intelligence (DGGI) over cashbacks offered to players. The DGGI has issued summons to several online gaming companies, including Delta Corp, which runs Adda52, seeking details about cashback offered to players since October 2023.

The online gaming industry is under scrutiny over cashbacks.

Typically, players on these platforms maintain three accounts: a deposit wallet, a payment wallet, and a promotional wallet. The DGGI has detected that companies were transferring cashback into the promotional wallets, potentially circumventing the new tax regime.

“When taxes are already paid on the entire consideration paid by the user, the credit from the online companies should not be subject to further GST.” - Abhishek Rastogi, founder of Rastogi Chambers

This development comes as the online gaming industry grapples with the impact of the 28% GST, which came into effect on October 1, 2023. The industry is already facing tax demands of approximately ₹1.14 lakh crore, with appeals pending in various courts.

The GST Council was expected to review the tax on online gaming after six months.

The GST Council was expected to review the tax on online gaming after six months, but the issue was not addressed in its last meeting. As the investigation unfolds, the industry awaits clarity on the taxation of cashbacks and potential relief from the high tax rate.

The online gaming industry is seeking clarity on taxation and relief from the high tax rate. With tax demands pending in courts, the industry is hoping for a resolution to this issue soon.

The online gaming industry is seeking clarity on taxation and relief from the high tax rate.

The issue of cashbacks and GST has sparked a debate in the online gaming industry. While some argue that cashbacks should not be subject to additional GST, others believe that the industry should comply with the tax regime.

As the investigation continues, the online gaming industry is bracing itself for the impact of the GST on its business. With the fate of cashbacks hanging in the balance, the industry is hoping for a swift resolution to this issue.

The online gaming industry is bracing itself for the impact of the GST on its business.