Nazara Tech Subsidiaries Receive Rs 1,120-cr GST Demand Notice

By: Admin July 17, 2024 Categories: GST Recent News

Two subsidiaries of Nazara Tech have received notices totaling Rs 1,120 crore in an ongoing GST-related matter, the online gaming and sports media company disclosed in an exchange filing on July 17.

Key Highlights:

  • Subsidiaries Involved: Openplay Technologies Pvt Ltd and Halaplay Technologies Pvt Ltd received show-cause notices for proposed tax liabilities of Rs 845.72 crore and Rs 274.21 crore, respectively, from the director general of GST Intelligence, Kolkata, for the period from 2017-18 to 2022-23.
  • Shares Trading Higher: Despite the news, shares of Nazara Tech were trading at Rs 919.75, up by 1.23 percent on NSE at 12:57 pm.
  • Issue at Hand: The GST claims relate to the calculation of GST based on the sums pooled by players as opposed to gross gaming revenues. Both subsidiaries are reviewing the notices with their legal counsels and tax advisors to determine their next steps.
  • Financial Impact: The affected units contributed less than 2 percent of the firm’s revenues and less than 1 percent of the profit according to the March 2024 quarterly results.
  • Company Performance: Nazara Technologies reported a net profit of Rs 0.18 crore on May 24, a significant drop from Rs 9.4 crore in the same quarter the previous year, mainly due to a Rs 16.87 crore loss from discontinued operations, including write-offs in legacy businesses such as Halaplay.
  • Industry Context: Similar retrospective tax notices have been issued to other skill-based gaming firms like Dream Sports, Gameskraft, Games 24×7, Delta Corp’s Deltatech Gaming, and Head Digital Works (A23) for alleged tax evasion amounting to over Rs 1 lakh crore. In 2022-23, around 71 show-cause notices were sent for alleged GST evasion worth Rs 1.12 lakh crore.
  • Legal Proceedings: A batch of 30 petitions by real money gaming companies challenging retrospective GST notices demanding payment calculated at 28 percent on the face value of bets is pending before the Supreme Court.

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