₹55,000 crore GST notices hit online gaming, Dream11 leads charge

The Directorate General of GST Intelligence (DGGI) has taken action against several online real money gaming (RMG) companies, issuing a series of pre-show cause notices that collectively amount to a staggering ₹55,000 crore in alleged goods and services tax (GST) evasion.

Among the companies targeted, Dream11, a prominent fantasy sports platform led by Harsh Jain, stands at the forefront with a GST demand notice exceeding ₹25,000 crore. This notice is notably one of the largest indirect tax claims made in the country's history, as per a Business Today report.

In addition to Dream11, Play Games 24x7, along with its affiliated platforms, and Head Digital Works have also received pre-show cause notices. These notices are accompanied by intimations of tax liabilities through the DRC-01 A form, signifying the severity of the allegations.

In response to the pre-show cause notice, Dream11 has taken legal action by approaching the Bombay High Court, signaling potential legal battles on the horizon.

Challenges and More Notices

The report suggests that more such notices are likely to be issued in the coming weeks, potentially bringing the total GST demand from RMG companies to a staggering ₹1 lakh crore, as confirmed by industry insiders.

These notices were prompted by a recent decision by the GST Council to impose a 28% GST on online gaming, calculated on the full face value of bets at entry level.

Play Games 24x7 and its affiliated platforms, such as RummyCircle and My11Circle, have been served notices demanding GST dues totalling ₹20,000 crore, while Head Digital Works faces a pre-show cause notice exceeding ₹5,000 crore.

Previously, the largest GST demand of ₹21,000 crore was directed towards Bangalore-based Gameskraft Technology, which has recently seen legal developments, with the Supreme Court stepping in to stay the Karnataka High Court's judgment that had quashed the GST notice against the company.

This notice pertains to the period spanning from 2017 to June 30, 2022. The RMG industry finds itself in a legal and financial battle as it navigates the implications of these significant GST demands.