Nazara Tech subsidiaries receive Rs 1,120-cr GST demand notice

The firm said these claims are related to the “calculation of GST based on the sums pooled by players as opposed to gross gaming revenues”

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

Shares of the company were trading at Rs 919.75, higher by 1.23 percent on NSE at 12:57pm.

The gaming firm said its subsidiary Openplay Technologies Pvt Ltd received a show-cause notice on July 16 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.

Another unit, Halaplay Technologies Pvt Ltd, also received a notice of a proposed tax liability of Rs 274.21 crore from the director general of GST Intelligence, Kolkata for the same period, according to the filing.

The firm said these claims are related to the “calculation of GST based on the sums pooled by players as opposed to gross gaming revenues”.

“Both the subsidiaries are reviewing the notices with their legal counsels and tax advisors to determine their future course of action,” the company statement said.

These units together contributed to less than 2 percent of the firm’s revenues and less than 1 percent of the profit, according to the March 2024 quarterly results.

Nazara Technologies on May 24 reported a net profit of Rs 0.18 crore, registering a significant drop from Rs 9.4 crore in the year-ago quarter.

This was mainly due to a Rs 16.87 crore loss from discontinued operations during the quarter, as a result of write-offs in many of the company's legacy businesses including its real-money gaming business Halaplay.

Authorities have previously served retrospective tax notices to a slew of skill-based gaming firms such as Dream Sports, Gameskraft, Games 24x7, Delta Corp's Deltatech Gaming, and Head Digital Works (A23) for alleged tax evasion to the tune of over Rs 1 lakh crore.

Also read: How GST Council's 28% tax levy affects India's real-money gaming sector

About 71 show-cause notices have been sent for alleged GST evasion worth Rs 1.12 lakh crore in 2022-23, and in the first seven months of 2023-24, then Minister of State for Finance Pankaj Chaudhary said in the Rajya Sabha in December 2023.

A batch of 30 petitions by real money gaming companies challenging retrospective GST notices demanding payment of thousands of crores calculated at 28 percent on the face value of bets is currently pending before the Supreme Court.