At GST Council meet, Atishi seeks withdrawal of tax notices to online gaming companies

An 'unstable, erratic tax environment' will deter foreign investors in the online gaming industry and impact the overall start-up ecosystem in the country, Atishi said.

Delhi Finance Minister Atishi on Saturday demanded the revoking of tax evasion notices served on online gaming companies and also opposed the high rate of tax imposed on the industry at a GST Council meeting here, a Delhi government statement said.

At a press briefing before the GST Council meeting, Atishi said tax evasion notices worth Rs 1.5 lakh crore to online gaming companies will finish them. The sector employs over 50,000 youths and attracts Rs 17,000 crore in foreign investments and therefore, it is important to withdraw the notices to protect it, she added.

An 'unstable, erratic tax environment' will deter foreign investors in the online gaming industry and impact the overall start-up ecosystem in the country, she said.

The start-ups in the country are at risk of widespread failure as the online gaming industry may crumble under the 28 per cent tax burden and tax evasion notices, Atishi added.

All the issues raised by the minister in her press briefing were also put before the GST Council, said the Delhi government statement.

"The imposition of excessive tax liabilities, coupled with the new GST rates at 28 per cent, will not only adversely affect the online gaming industry but will also discourage investors from investing in Indian start-ups, ultimately harming the entire start-up ecosystem," she said.

Atishi argued that imposing a 28 per cent tax on this industry would have severe consequences. Excessive taxation on legal online gaming would encourage illegal activities and drive many start-ups out of business, she said.

The minister further said that the 28 per cent tax on the online gaming industry was set to take effect from October 1 but before that, the GST Council sent the tax notices totalling Rs 1.5 lakh crore.

"Subjecting an industry with a current valuation of Rs 23,000 crore to taxes equal to six times its total value would lead to the industry's downfall. No company would be able to pay taxes equal to its total worth," she said.

The Delhi minister emphasised that if young start-ups are scared away from the industry, India's next Flipkart, Zomato, or Paytm might never emerge.