Delta Corp and Nazara Tech shares surged up to 7% as Supreme Court on January 10 stayed GST show cause notices to the tune of Rs 1.12 lakh crore to online gaming companies.
Supreme Court stayed all further proceedings with respect to all show cause notices until final disposal of case.
The apex court will take up the case on March 18 for final hearing.
At 12:10 pm on January 10, Delta Corp shares on NSE were trading over 4% higher at Rs 118.16 apiece while Nazara Tech shares on NSE were trading 1.5% lower at Rs 976.4 apiece.
The Supreme Court's decision will come as a relief to gaming companies and could potentially stabilise their financial outlook.
By staying these notices, the Supreme Court has temporarily halted the coercive actions that could have been taken by tax authorities against these gaming firms.
Online gaming companies have been sent 71 show-cause notices involving the evasion of Goods and Services Tax (GST) worth Rs 1.12 lakh crore in 2022-23 and the first seven months of 2023-24.
Online gaming firms have been grappling over the payment of 28 percent GST instead of 18 percent for the period up to October 1, 2023. While the companies argue that 28 percent tax is applicable only starting October 1, the government is of the opinion that the October 1 revision only provided clarity to a law that was already in force. The government's stance is that the demand for tax dues is not retrospective in nature.
The GST Council, in August 2023, amended the law to clarify that all online games involving bets, irrespective of skill or chance, would attract a GST rate of 28 percent on the full value of the bets placed, and not on the gross gaming revenue, from October 1.
Following the decision, online gaming companies have been served with huge tax demands that experts say will likely kill the entire industry.
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