The gaming industry is currently facing financial upheaval following the Directorate General of GST Intelligence (DGGI)’s issuance of pre-show cause notices to three major gaming companies. These notices allege an astounding INR 50,000 Crore in GST dues, serving as a stark reminder of the sector’s tax responsibilities.
The purpose of these notices is to address the pending GST payments related to all bets placed from 2017 to June 2022. Over 40 other firms within the industry are likely to receive similar notices, suggesting a widespread issue within the gaming sector.
On September 22, Delta Corp received a notice for an outstanding GST amount of INR 11,140 Crores. Three of its subsidiaries – Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruises – were collectively issued a notice for a colossal INR 5,682 Crores. The combined financial responsibility for Delta Corp and its entities amounts to an enormous INR 16,822 Crores.
Just days after this startling revelation, it was reported that Dream11, India’s highest-valued gaming firm co-founded by Harsh Jain, was issued a similar notice by the DGGI. This led the company to take legal action, following in the footsteps of Gameskraft and Delta Corp.
Dream11 has contested the validity of certain provisions of GST Law before the Bombay High Court after receiving a tax notice totalling INR 1,221 Crores for the periods of 2017-18 and 2018-19. While proceedings initiated by DGGI against GamesKraft for INR 21,000 Crore tax dues are ongoing, Dream11’s current tax notice was issued by Maharashtra’s state GST department.
Reports indicate that tax claims against Dream11 total a staggering INR 40,000 Crores. This represents the largest indirect tax claim in Indian history, surpassing the INR 21,000 Crore notice served to Gameskraft.
Despite reporting a net profit of INR 142 Crores in FY22 and total revenues of INR 3,841 Crores, Dream11 has not been immune to the impact of these developments. The fantasy sports behemoth, valued at $8 Billion earlier this year, is likely to see its valuation significantly affected by these recent events. Over the next few days, several other gaming companies are expected to receive similar tax obligation notices.