DGGI raises Rs 55,000-cr tax demand from eGaming companies
The Directorate General of gst Intelligence (DGGI) has sent out a dozen pre-show cause notices to online real money gaming (RMG) companies over goods and services tax dues of about Rs 55,000 crore, said people with knowledge of the matter. These include a GST notice of about Rs 25,000 crore to fantasy platform Dream 11, possibly the largest indirect tax notice ever served in the country, they said.
With more notices expected in the coming weeks, the total GST demand raised by the DGGI from RMG companies across the country might touch Rs 1 lakh crore, said industry executives.
he notices were issued after the recent change in GST rates for real money games increased the levy to 28% on the total bet placed at entry level of each gaming session on RMG platforms.
The other companies which have been served the pre-show cause notices include Play Games24x7 Pvt Ltd and its affiliates and Head Digital Works Pvt Ltd, said the people, who did not wish to be identified.
“While Dream11 has been served a pre-show cause of over Rs 25,000 crore on Monday, a similar notice seeking GST dues of Rs 20,000 crore has been issued to Play Games24x7 and its affiliates, including RummyCircle and My 11 Circle. In the case of Head Digital Works a pre-show cause notice raising a demand of over Rs 5,000 crore has been served,” one of the persons told ET.
The DGGI will raise the final demand through show-cause notices after studying the reply of the companies, the person said.
The pre-show cause notice sent to Dream11 surpasses the Rs 21,000 crore notice sent to Gameskraft, which has contested the levy in the Supreme Court.
Games 24X7 runs a variety of online games where users can wager on the outcome of the games. Among the company’s major products are fantasy game My11Circle, a competitor of Dream11, and online rummy platform RummyCircle, a competitor of Gameskraft’s online rummy game Rummyculture.
Hyderabad-based Head Digital Works runs a number of real money games, including A23 Rummy as well as games such as poker, pool and fantasy sports.