Nazara Technologies Faces Rs 1,120 Crore GST Liability Notices; Subsidiaries Plunge 5%

By: Admin
July 19, 2024
Categories: GST Recent News
4 Min Read

Nazara Technologies Subsidiaries Face Rs 1,120 Crore GST Liability Notices, Shares Plummet 5%

Shares of Nazara Technologies witnessed a sharp decline of over 5% on July 18 following significant GST liability notices served to its subsidiaries, Openplay Technologies and Halaplay Technologies. These notices amount to nearly Rs 1,120 crore, impacting the company’s stock performance.

Background and Details
Nazara Technologies disclosed that Openplay Technologies received a show cause notice from the Director General of GST Intelligence, Kolkata, indicating a proposed liability of Rs 845.72 crore. Similarly, Halaplay Technologies is facing a liability of Rs 274.21 crore. These liabilities are linked to GST calculations based on pooled sums by players rather than gross gaming revenues, spanning from 2017-18 to 2022-23.

Company Response
In response, Nazara Technologies stated that both subsidiaries are currently seeking guidance from legal and tax advisors to determine their course of action. The company clarified that for the quarter ending March 2024, these subsidiaries contributed less than 2% of its revenues and less than 1% of its profit.

Market Impact
As of 9:26 am, Nazara Tech shares were trading 4.8% lower at Rs 880 on the NSE. Year-to-date, the stock has risen approximately 2%, which is below the benchmark Nifty’s 13% increase during the same period. However, over the past year, Nazara Tech has delivered a 31% return, outperforming Nifty’s 24% return.

Regulatory Environment
It’s noteworthy that last year, GST officers issued numerous show cause notices to online gaming firms, alleging GST evasion amounting to over Rs 1.12 lakh crore for FY23 and FY24. Many companies have challenged these notices, and the cases remain unresolved.

Conclusion
Nazara Technologies continues to navigate through these regulatory challenges, with ongoing consultations to address the GST liabilities faced by its subsidiaries. The outcome of these deliberations will be crucial for the company’s future financial performance and market sentiment.

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