Gaming Company Nazara Tech's Subsidiaries Get Rs 1,120 Crore GST Demand Notice

Nazara Technologies on Wednesday said that two of its subsidiaries have received show cause notice and intimation for GST liability adding up to nearly Rs 1,120 crore.

Openplay Technologies has received a show cause notice from the Director General of GST Intelligence, Kolkata, for a proposed liability of Rs 845.72 crore, while in case of another subsidiary—Halaplay Technologies—the liability amounts to Rs 274.21 crore.

Both the claims are for the period from 2017-18 to 2022-23.

The two subsidiaries are reviewing the notices with their legal counsels and tax advisors to determine their future course of action, Nazara said in a BSE filing.

"We wish to inform you of the following developments related to ongoing GST matters of the gaming industry on behalf of our subsidiaries...Openplay Technologies...received a show cause notice on 16th July 2024 under Section 74(1) of the CGST Act, 2017, and the State SGST Act, 2017, from the Director General of GST Intelligence, Kolkata for a proposed liability of Rs 845.72 crore for the period from 2017-18 to 2022-23," Nazara said.

Halaplay Technologies faces a "proposed tax liability under the CGST Act, 2017, amounting to Rs 274.21 crore from the Director General of GST Intelligence, Kolkata for the same period".

These claims are in relation to calculation of GST based on the sums pooled by players as opposed to gross gaming revenues, according to the company.

"For the quarter ended March 2024 (January-March 2024), these subsidiaries collectively contributed to less than 2% of our revenues and less than 1% of our profit," it added.

The GST Council had clarified, in August, that 28 per cent Goods and Services Tax (GST) would be levied on full value of bets placed on online gaming platforms.

Last year, GST officers sent around 71 show cause notices to online gaming companies for alleged GST evasion of over Rs 1.12 lakh crore during financial years 2022-23 and 2023-24.

Many of them have gone to court against the notices and the cases are pending.