Paytm’s gaming unit gets Rs 5,712 Cr GST notice
Paytm’s gaming subsidiary, First Games Technology, will file a writ petition challenging the show cause notice and seeking interim relief, in line with the actions taken by other gaming companies.
Paytm’s gaming subsidiary, First Games Technology, has received a show cause notice from the Directorate General of GST Intelligence (DGGI), indicating a tax liability of Rs 5,712 crore along with applicable interest and penalties.
According to a BSE filing, the notice takes into account that GST liability be computed at 28% on the total entry amount as opposed to the 18% GST paid on the platform fee or revenue that is generated by gaming companies.
Gaming companies have argued against this structure and have suggested that GST should be calculated on gross gaming revenue rather than on the face value of bets.
In line with the industry, First Games has said that it would file a write petition challenging the notice on legal grounds, including retrospective application of GST amendment dated October 1, 2023.
The gaming company is not the only firm that has received retrospective GST notices. Companies including Games24X7, Dream11, and Head Digital Works, have taken the legal route to combat retrospective GST notices.
The Indian gaming industry has been critical about retrospective GST notices, which, they say, would weigh heavily on companies’ tax liabilities and cripple emerging startups in the segment.
In January this year, the Supreme Court stayed GST proceedings against 49 online gaming companies over retrospective demand notices issued to them—a move that was welcomed by the industry at large.
Paytm’s parent company One 97 Communications said that the show cause notice does not impact its operations.
Edited by Swetha Kannan