E-Gaming Companies against GST demand in court

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Online gaming companies like Dream 11, Games 24×7, and Head Digital Works are in trouble because they have to pay more than Rs 55,000 crore in taxes.

Now, they are running to courts as they fear bankruptcy and other challenges.

Let’s learn about the latest updates in the Gaming Industry.

DGGI Sends Notices to Online Gaming Companies

  • The DGGI (Directorate General of GST Intelligence) has sent about twelve preliminary notices to online gaming companies like Dream11, Games 24×7, and Head Digital Works.
  • These notices are about the GST money these companies owe, which adds up to about Rs 55,000 crore.
  • Dream11, a popular fantasy sports platform, got a big GST notice of more than Rs 25,000 crore.

Gaming Industry Fears Bankruptcy Amid Investor Concerns

As a result of notices, businesses in the gaming industry are worried because it could lead to some companies going bankrupt.

Investors who give money to these companies are also worried that this problem might make it even harder for new Indian startups to get money.

Gaming Companies Challenge Retrospective GST Application

  • Gaming companies are challenging the retrospective application of GST on their previous revenues.
  • The GST Council imposed a 28% tax on full-face value in July.
  • Authorities are expected to issue more notices, potentially leading to a total GST demand of Rs 1.5 lakh crore.
  • Dream11, valued at $8 billion, has filed a petition in the Bombay High Court against the government.
  • Dream11 argues that the notice and investigations have a retrospective effect, starting from October 1, 2023.

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New Tax Rules Add Uncertainty to Business Environment

  • Executives in gaming companies are worried that the tax authorities are asking for an incredibly high amount of taxes from companies.
  • This amount is so big that it could make companies go bankrupt.
  • One person said that companies have no choice but to go to court because the tax demands are much larger than their earnings.
  • Experts believe some companies can change their business plans to pay taxes under the new rules, but paying taxes for past years is too difficult.

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