According to a covert inquiry conducted by the Goods and Services Tax (GST) Intelligence wing, M/s Probo Media Technologies Private Limited, an online betting operator, committed tax evasion. The Haryana Excise and Goods and Services Tax (GST) department subsequently published a notice for an evasion of Rs. 1500 crores.
The communication indicated that if no cause was given against the notice within 30 days or they failed to appear before the adjudicating body when the case was scheduled for hearing, the case would be determined ex parte on the basis of the evidence.
The business was misclassifying its activities in order to avoid paying taxes, according to GST Intelligence. The business avoided paying 1,500 crore in taxes by paying GST at the rate of 18%. On the other hand, the face value of bets is subject to a 100% GST tax, and the tax rate on the probability of winning in betting, gambling, or horse racing at race clubs is 28%.
The Excise and Taxation Commissioner stated that the notices were issued due to the findings of the GST Intelligence Wing on the tax evasion and also added they are using IT tools in an effective manner and on the basis of the IT tools and data analytics, we are generating red flex. According to the commissioner, they were taking stern actions against such tax evaders.
There are several online betting sites where consumers are taken advantage of and fall into such traps with ease. Recently the Karnataka High Court quashed the show cause of Rs. 2100 crores against the Gameskraft. The bench observed that the nature of the games should be determined by experts, not department officers.
Read More: GST on Online Gaming: Karnataka HC quashes SCN of Rs. 21000 Crores against Gameskraft
The Central Board of Direct Taxes (CBDT) has notified the Income Tax Rule 133 to calculate net winnings from online gaming on 22nd May 2023.
Read More: CBDT notifies Income Tax Rule 133 to Calculate Net Winnings from Online Gaming
Also, Central Board of Direct Taxes (CBDT) has issued the Circular with guidelines for the removal of difficulties under sub-section (3) of section 194BA of the Income Tax Act, 1961, for much-needed clarity in the matter of income tax on online gaming.
Read More: CBDT issues Guidelines to Clarify ‘Net Winnings’ and Income Tax Implications on Online Games
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