The gaming industry has been hurled into turmoil with the Directorate General of GST Intelligence (DGGI) issuing pre-show cause notices to three prominent gaming firms, alleging a staggering INR 50,000 Crore in GST dues. This serves as a reminder of the tax obligations within the gaming sector.
The focus of these notices is to address the outstanding GST payments related to total bets placed during the period spanning 2017 to June 2022. Over 40 gaming firms are on the radar and may receive similar notices, indicating a potentially widespread issue within the gaming industry.
On September 22, Delta Corp was served a notice citing an outstanding GST amount of INR 11,140 Crores. Three of its subsidiaries – Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruises – were also jointly handed a notice amounting to a massive INR 5,682 Crores. Cumulatively, the financial obligation for Delta Corp and its entities stands at a monumental INR 16,822 Crores.
Just days after this shocking news, it was reported that Dream11, India’s largest gaming firm by valuation, co-founded by Harsh Jain, had also been served a similar notice by the DGGI. This prompted the firm to take a legal action, following in the footsteps of Gameskraft and Delta Corp.
The unicorn fantasy gaming operator challenged the validity of certain provisions of GST Law before the Bombay High Court after it was handed a tax notice of INR 1221 crores for the 2017-18 and 2018-19 period. While proceedings against GamesKraft for INR 21,000 crore tax dues were initiated by DGGI , the present tax notice to Dream11 was served by Maharashtra state GST department.
According to reports, the tax claims against Dream11 amount to INR 40,000 Crores. This is the largest indirect tax claim in India, surpassing the INR 21,000 Crore notice served on Gameskraft.
Also read: Gameskraft shuts down operations of its fantasy platform Gamezy
Notably, Dream11 reported a net profit of INR 142 Crores in FY22 and total revenues of INR 3,841 Crores. Earlier this year, the fantasy sports giant was valued at $8 Billion. However, these recent developments have sent shockwaves, significantly impacting the valuations of gaming firms. In the coming few days, several other gaming companies are likely to receive tax obligation notices.
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