"Grover urges FinMin to scrap Rs 55k-cr gaming tax notice"

In a bold and thought-provoking statement, Ashneer Grover, co-founder of BharatPe, has called for the repeal of a staggering Rs 55,000-crore Goods and Services Tax (GST) demand issued to online gaming companies in India. Grover's outspoken stance underscores the critical challenges that businesses face in India's ever-evolving tax landscape and raises questions about the feasibility and implications of such a massive tax demand.

 

The Controversial Tax Notice

The Directorate General of GST Intelligence (DGGI) has reportedly sent out a dozen pre-show cause notices to various online real money gaming companies, accusing them of evading GST totaling approximately Rs 55,000 crore. Notably, a tax notice exceeding Rs 25,000 crore has been directed at Dream11, a prominent fantasy sports platform led by Harsh Jain, making it possibly the largest indirect tax notice ever served in the country.

Apart from Dream11, pre-show cause notices have also been served to Play Games 24x7 and its affiliates, as well as Head Digital Works. These notices have sparked a contentious debate over the fairness and practicality of such hefty tax demands on the burgeoning online gaming industry.

 

 

Ashneer Grover's Perspective

Ashneer Grover took to social media to voice his concerns about the consequences of this massive tax demand. He succinctly stated, "Na koi tax Dega, na sarkar ko milega" (neither will anyone pay taxes, nor will the government benefit). Grover argues that this exorbitant tax notice primarily serves to burden businesses and create a windfall for lawyers who will challenge it in the Supreme Court.

In his critique, Grover raised a pertinent question: if such a significant GST liability existed, why had tax authorities not pursued it over the past ten years? He also likened this situation to cast aspersions on the competence of the 'Big 4' accounting firms, suggesting that the retrospective tax demand is neither practical nor fair.

 

The Call for Repeal

Ashneer Grover went on to emphasize that imposing a "retrospective tax" is not conducive to a healthy business environment. He requested the Ministry of Finance and the Prime Minister's office to address this issue promptly. He argued that such retroactive tax measures hinder India's ambition to become a $ 5 trillion economy and discourage businesses from investing and growing within the country.

 

FAQS

1. What is the Rs 55,000-crore tax notice that Ashneer Grover is referring to?

• Ashneer Grover is referring to the alleged Rs 55,000-crore Goods and Services Tax (GST) demand issued to online gaming companies in India by the Directorate General of GST Intelligence (DGGI).

2. Why does Ashneer Grover believe that "na koi tax Dega, na sarkar ko milega" (neither will anyone pay taxes, nor will the government benefit)?

• Grover argues that the massive tax demand primarily serves to burden businesses and benefit lawyers who will challenge it in the Supreme Court. He believes that businesses are unlikely to pay such a significant amount of tax.

3. Which gaming companies have received these tax notices, and why are they controversial?

• Dream11, Play Games 24x7, and Head Digital Works, among others, have reportedly received pre-show cause notices for alleged GST evasion. The controversy lies in the substantial amount of tax being demanded and the potential impact on the online gaming industry.

4. What is the significance of the Rs 25,000-crore tax notice issued to Dream11?

• The Rs 25,000-crore tax notice served to Dream11 is noteworthy because it is possibly the largest indirect tax notice ever issued in India, raising questions about the fairness and practicality of such a demand.

5. What question did Ashneer Grover raise about the tax authorities' actions?

• Grover questioned why the tax authorities had not pursued this tax collection over the past ten years if such a substantial GST liability existed.

6. How does Ashneer Grover view the situation in terms of "retrospective tax"?

• Grover believes that this situation is akin to imposing a "retrospective tax," which he considers undesirable and counterproductive to a healthy business environment.

7. What action does Ashneer Grover call for regarding the tax notice?

• Ashneer Grover has called upon the Ministry of Finance and the Prime Minister's office to address this issue promptly and reconsider the imposition of retroactive tax measures.

8. How does Ashneer Grover view the impact of such tax demands on India's economic goals?

• Grover argues that such tax demands hinder India's ambition to become a $ 5 trillion economy and discourage businesses from investing and growing within the country.

9. What is the broader context of Ashneer Grover's statement in the article?

• Ashneer Grover's statement highlights the challenges and complexities of India's taxation system and underscores the need for a balanced and business-friendly tax environment for economic growth.

 

The controversy surrounding the Rs 55,000-crore GST demand on online gaming companies has brought into focus the challenges and complexities of India's taxation system. Ashneer Grover's outspoken stance serves as a reminder that a balanced and business-friendly tax environment is crucial for India's economic growth. As the debate continues, it remains to be seen whether the government will reconsider its approach to these tax demands and strike a fair balance between revenue generation and supporting businesses in the country.