Delta Corp shares test 5-month high on hope that GST Council may waive off retrospective tax demand

Online gaming industry has been proposing that tax be computed on the Gross Gaming Revenue (GGR) instead of full face value.

Shares of online gaming player Delta Corp tested a five-month high after a news report suggested the GST Council could consider amendment to the CGST Act to quash retrospective tax demands. The gaming industry has been seeking a more favourable taxation regime from the government.

At 1 pm, shares of Delta Corp were up over 12 percent while Nazara Tech too seen a spike in share price early in trade. In the past one month, the share prices of Delta Corp are higher by 23 percent and that of Nazara is up by 40 percent.

The Act has provisions for notices on instances when lower taxes were paid by e-gaming entities due to lack of clarity or issues relating to interpretation of the law. The GST Council may deliberate on a recommendation to amend the Act at its upcoming meeting on June 22, The Economic Times reported.

Back in April, Prime Minister Modi had said that the government is not in favour of over-regulation of the gaming industry, and said a system was needed to address challenges.

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

The online gaming industry had said that they will approach the new government after the general elections to seek a reduction in Goods and Services Tax (GST). They propose that the tax be computed on the Gross Gaming Revenue (GGR) instead of the full face value. Industry players requesting not to be named had said the proposal is based on the belief that the current high tax rate is unsustainable for startups in the sector.

Since October 2023, the GST on online gaming has been levied at full face value instead of GGR. Gross gaming revenue (GGR) is the difference between the amount wagered minus the amount won. Consequently, the revenue from online gaming has increased 5-6 times from Rs 200 crore to Rs 1100 per month.