eGaming companies are asked to pay DGGI Rs 55,000 crore in taxes

26 Sep 2023 , 11:52 AM

According to news reports, the Directorate General of GST Intelligence (DGGI) has written 12 pre-show cause notices to online real money gaming (RMG) organizations about GST obligations totaling nearly Rs 55,000 crore. 

These include what may be the largest indirect tax notice ever served in the nation, a GST notice to fantasy sports platform Dream 11 for around Rs 25,000 crore, according to the reports.

According to business insiders who talked to ET, the total GST demand made by the DGGI from RMG enterprises across the nation may reach Rs 1 lakh crore as more notices are anticipated in the upcoming weeks.

An intimation of tax, known as payable through the DRC-01, in the context of the GST The government issues a form. Before serving a show-cause notice, the department issues what is known as a pre-show cause notice.

The warnings were sent out as a result of the recent change in GST rates for real money games, which raised the fee for each gaming session on RMG platforms from 2% to 28% of the entire bet.

According to one of the reports, Play Games24x7 Pvt Ltd and its affiliates and Head Digital Works Pvt Ltd are the other businesses that have received pre-show cause letters.

‘While Dream11 received a pre-show cause worth over Rs 25,000 crore on Monday, Play Games24x7 and its affiliates, including RummyCircle and My 11 Circle, were served with a notice for GST dues of Rs 20,000 crore. One of the people informed ET that Head Digital Works has received a pre-show cause notice with a demand of more than Rs 5,000 crore.

After reviewing the companies’ responses, the DGGI will issue the final demand via show-cause notifications, the source claimed.

The pre-show cause notice for Dream11 is larger than the notice for Gameskraft, which has challenged the levy in the Supreme Court, which was sent for Rs 21,000 crore.

Users can place bets on the results of a range of online games run by Games 24X7. Fantasy game My11Circle, which competes with Dream11, and online rummy platform RummyCircle, which competes with Gameskraft’s online rummy game Rummyculture, are two of the company’s main offerings.

A23 Rummy and other real money video games including poker, pool, and fantasy sports are all offered by Hyderabad-based Head Digital Works.

If show-cause notifications are issued and the companies disagree with the demand made, they may appeal the decision before the adjudicating body.

On September 6, the Supreme Court overturned a prior decision by the Karnataka High Court over Gameskraft’s Rs 21,000 crore GST demand. Three weeks later, the court rescheduled the hearing and ordered the parties to submit collections of rulings and other pertinent paperwork. On September 16, Gameskraft shut down Gamezy, one of its top apps.

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