Global Economy

Law committee recommends amendment to CGST law to quash retro tax notice

NEW DELHI: The law committee under the goods and services tax (GST) council has recommended an amendment to GST act to raise tax notices where the low tax was paid due to interpretation of law or lack of clarity, ET has learnt.

The recommendation, if approved by the council may give relief to a large number of industries including online gaming industry, which was seeking relief from retrospective tax notice.

The recommendation may be placed before the GST council and once approved this would pace way for quashing a large number of notices sent to online gaming industry.

The law committee has suggested amendment to the Central Goods and Services Tax (CGST) Act, 2017 via the introduction of a new Section 11A in the legislation.

According to the new proposed amendment, which is part of the GST council agenda, the section will empowers the central government to “not recover the GST not levied or short-levied as a result of general practice”.

Officials say this will allow the them to quash the tax demand raised with the retrospective effect. However, the amendment offers no relief for overpaid taxes, as companies cannot claim refunds for any excess GST paid due to these practices.The GST Council chaired by Finance Minister Nirmala Sitharaman, will meet after a gap of eight months on June 22, and is also likely to decide on reviewing the implementation of 28% GST on the online gaming sector.

The Directorate General of Goods and Services Tax Intelligence (DGGI) detected 6,323 cases in financial year 2023-24 involving a tax evasion of Rs 1.98 lakh crore in 2023, out of which online gaming companies have the maximum number of tax evasion notices, over Rs one lakh crore.


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