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Online Gaming GST Row: SC Stays ₹5,712-Crore Demand Against Paytm’s First Games
OutlookIndia
·
2m ago
Medial
The Supreme Court has stayed a ₹5,712-crore GST demand against Paytm's First Games, a real-money gaming platform. This dispute involves the classification and taxation of real-money gambling platforms under GST, impacting the broader online gaming industry. First Games challenged a retrospective GST notice, seeking relief on the GST rate applied to platform fees versus total bets. The issue highlights ongoing controversies about GST categorization and taxation in the Indian online gaming sector.
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Paytm’s First Games faces Rs 5,712 Cr GST demand notice
Entrackr
·
3m ago
Medial
Paytm’s First Games faces Rs 5,712 Cr GST demand notice First Games Technology Private Limited, a subsidiary of One 97 Communications Limited, has received a show cause notice from the Director General of GST Intelligence, Delhi (DGGI). According to a disclosure filed by Paytm with the National Stock Exchange (NSE), the notice proposes a liability of Rs 5,712 crore, along with applicable interest and penalties, for the period January 2018 to March 2023. The company stated that the notice pertains to an ongoing matter in the online gaming industry over the past 18 months, where GST liability has been calculated at 28% on the total entry amount, instead of 18% on the platform fees (revenue) collected by gaming companies. According to the disclosure, First Games will file a writ petition challenging the show cause notice (SCN), opposing the retrospective application of the October 1, 2023, GST amendment and earlier GST interpretations. It will also seek interim relief similar to that granted to others in the gaming industry. Paytm stated that the SCN will not impact its operations, as the carrying value of its investment in First Games was already nil in Paytm’s consolidated financial statements as of March 2024. Last month, Paytm also received a show cause notice from the Directorate of Enforcement (ED) against certain allegations attributed to Little Internet Pvt Limited (LIPL) and NearBuy India Pvt Ltd (NIPL). The development comes ahead of Paytm’s Q4 results. During the third quarter of the previous fiscal year (Q3 FY25), its revenue from operations stood at Rs 1,828 crore, with a loss of Rs 208 crore in the same period.
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Paytm gets relief as Supreme Court stays Rs 5,712 Cr GST notice
Entrackr
·
2m ago
Medial
Paytm gets relief as Supreme Court stays Rs 5,712 Cr GST notice. In its order, the apex court directed, “Further proceedings of all the impugned show cause notices shall remain stayed till the final disposal of the main matter along with all the matters which are tagged.” The Supreme Court of India has stayed the proceedings of a Rs 5,712 crore GST Show Cause Notice (SCN) issued to First Games Technology Private Limited, a subsidiary of One 97 Communications Ltd (Paytm). Paytm shared the update in a regulatory filing on May 24, after the Supreme Court issued an interim order on May 23. The order came in response to a petition by First Games, which challenged a GST notice from the Directorate General of GST Intelligence (DGGI) for the period from January 2018 to March 2023. In its order, the apex court directed, “Further proceedings of all the impugned show cause notices shall remain stayed till the final disposal of the main matter along with all the matters which are tagged.” The stay gives Paytm’s gaming arm temporary legal relief and more time to defend its case without facing immediate penalties. Earlier, Paytm said the notice is part of an ongoing issue in the online gaming industry. The disagreement is about GST being charged at 28% on the full entry amount, while gaming companies believe it should be 18% only on their actual earnings from platform fees. The SCN is part of a broader industry-wide probe by the GST department, which has issued similar notices to several gaming companies. The matter is being closely monitored by stakeholders across the online gaming sector. Paytm's operating revenue fell by 16% year-on-year to Rs 1,911 crore in the fourth quarter of FY25, down from 2,267 crore in the same quarter of FY24. However, the Noida-based company narrowed its losses to 23 crore in Q4 FY25, a 96% reduction from 536 crore in Q4 FY24.
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28% GST On Gaming: SC Schedules Final Hearing On July 25
Inc42
·
15d ago
Medial
The Supreme Court of India will hold a final hearing on July 25 concerning GST evasion allegations totalling INR 1.12 Lakh Cr against online gaming companies. These companies argue that the 28% GST on real money games is flawed and lacks legal basis since Rule 31A of the GST Rules did not comply with mandatory processes. The gaming platforms claim retrospective GST notices and unclear provisions violate tax principles, seeking revocation of these notices.
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SC refuses interim relief to Games 24x7 & Head Digital Works on tax notices
Inc42
·
1y ago
Medial
The Supreme Court has denied interim relief to e-gaming companies Games24x7 and Head Digital Works, regarding Goods and Services Tax (GST) demand notices. The court will consider the constitutional validity of imposing a 28% GST on the full value of bets placed in online games, instead of the gross gaming revenue. The online gaming industry in India is also facing other challenges, with platforms like Quizzy, OWN, and Fantok temporarily suspending operations due to changing tax and regulatory conditions. Show-cause notices for suspected tax evasion have also been issued to several companies.
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SC stays GST notices worth over Rs 1 L Cr against online gaming firms for tax fraud
YourStory
·
6m ago
Medial
The Supreme Court has stayed GST authorities' showcause notices, valued at over Rs 1 lakh crore, against online gaming firms over alleged tax evasion. Justices J B Pardiwala and R Mahadevan ruled that all proceedings against these companies remain paused, pending further hearing. The GST law was amended in October 2023 to require foreign online gaming firms to register in India, with a 28% GST on bets. Various firms challenged these demands, and the Supreme Court consolidated cases for review.
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Government to impose 28% GST on online games
Entrackr
·
2y ago
Medial
The 50th Goods and Services Tax (GST) Council meeting on Tuesday decided that a 28% GST will be levied on the full face value of online gaming. The move deals a severe blow to the gaming companies that offer real-money games.
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Gameskraft to discontinue super app Gamezy amid Rs 21,000 crore tax demand
Economic Times
·
1y ago
Medial
Bengaluru-based online gaming company Gameskraft announced that it will phase out its super app, Gamezy, which offers real money and casual games, including ludo and card games. This decision comes after facing a potential Rs 21,000 crore goods and services tax (GST) payout. The company will focus on developing and promoting dedicated single apps like RummyPrime and LudoCulture, as it believes in providing deep category-specific experiences for players. Numerous online gaming companies have been impacted by the 28% levy on online gaming imposed by the GST Council.
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SC seeks centre’s reply on pleas of Games24x7, head digital works on GST notice
Inc42
·
1y ago
Medial
The Supreme Court of India has issued notices to the Centre and the GST department in response to pleas by online gaming companies Head Digital Works and Games24x7. The companies are challenging the retrospective imposition of a 28% Goods and Services Tax (GST) on the full value of bets placed, rather than on the gross gaming revenue. The court has asked both parties to respond to the plea within two weeks. The case is expected to be heard in the coming months as the online gaming industry grapples with the challenges imposed by recent GST changes.
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Gameskraft, Nazara, MPL, AIGF and others request govt to reconsider 28% GST on real-money gaming
Money Control
·
2y ago
Medial
India's leading real-money gaming startups, including Dream11, Paytm First Games, and MPL, have appealed to the government to reconsider the decision to impose a 28% Goods and Services Tax (GST) on their industry. They argue that the high tax rate would hinder their ability to operate and discourage users from participating in online gaming platforms, impacting the growth of the sector.
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HC quashes DGGI’s ₹21k cr tax demand from Gameskraft
Livemint
·
1y ago
Medial
The Karnataka High Court has overturned a ₹21,000 crore ($2.8 billion) goods and services tax (GST) demand on Gameskraft, a Bengaluru-based online gaming company. The court ruled that the Directorate General of GST Intelligence (DGGI) misinterpreted the law and that online rummy is a game of skill, not chance. The ruling is seen as a precedent for online gaming startups and may influence discussions on taxation policies for the industry by the GST Council. The verdict brings clarity and relief to the online gaming sector in India.
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