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Paytm’s First Games faces Rs 5,712 Cr GST demand notice

EntrackrEntrackr · 2m ago
Paytm’s First Games faces Rs 5,712 Cr GST demand notice
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

EntrackrEntrackr · 1m ago
Paytm gets relief as Supreme Court stays Rs 5,712 Cr GST notice
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.

Zomato receives Rs 803 Cr demand notice from GST

EntrackrEntrackr · 7m ago
Zomato receives Rs 803 Cr demand notice from GST
Medial

Foodtech major Zomato has received a demand notice of Rs 803 crore (nearly $100 million) from the Joint Commissioner of CGST & Central Excise, Thane Commissionerate, Maharashtra. On Thursday, the company received a demand order passed by the Joint Commissioner of CGST & Central Excise, Thane, of Rs 803 crore for the period from 29 October 2019 to 31 March 2022, the company’s filing accessed from the National Stock Exchange shows. The demand order has been received in respect of the non-payment of GST on delivery charges, including interest and penalties. The total amount of Rs 803 crore comprises Rs 401.7 crore each as GST demand and interest/penalties. “We believe that we have a strong case on merits, which is backed by opinions from our external legal and tax advisors. The company will be filing an appeal against the order before the appropriate authority,” the filing further added. Zomato closed at Rs 285.6 (as on 12th December), with the market capitalization standing at Rs 2,75,614 crore (approximately $32.8 billion). The GST demand notice might affect the company’s shares tomorrow. The company recently raised over $1 billion through a Qualified Institutions Placement (QIP) of equity shares. For the fiscal year ending in, Zomato achieved a remarkable 68.5% quarter-on-quarter growth in operating revenue, reaching Rs 4,799 crore in Q2 FY25 from Rs 2,848 crore in Q2 FY24. The company also recorded a 4.8x increase in net profit to Rs 176 crore in the September quarter. Its arch-rival Swiggy posted Rs 3,601 crore of revenue, with a net loss standing at Rs 625 crore during the second quarter of the ongoing fiscal year. The recently listed firm closed at Rs 507.6 per share, with a total market capitalization of Rs 1,13,623 crore (approximately $13.5 billion).

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