Nazara Technologies faces a potential tax bill of Rs 1,120 crore

Indian gaming and sports company Nazara Technologies faces a potential tax bill of Rs 1,120 crore after its subsidiaries, Openplay Technologies and Halaplay Technologies, received show cause notices from the Director General of GST Intelligence in Kolkata. The notices, issued on July 16, allege GST liabilities of Rs 845.72 crore and Rs 274.21 crore respectively, for the period 2017-18 to 2022-23.

The dispute revolves around calculating Goods and Services Tax (GST). Nazara believes GST should be based on "pooled player sums" rather than total gaming revenue. The company is consulting legal and tax advisors to determine their next move. Financially, the impact seems minimal, with the affected subsidiaries contributing less than 2% of Nazara's revenue and 1% of its profit in the last quarter (January-March 2024).

These claims are in relation to the calculation of GST based on the sums pooled by players as opposed to gross gaming revenues, the company filing said in response to the show cause notices sent to its subsidiaries. "Both subsidiaries are reviewing the notices with their legal counsels and tax advisors to determine their future course of action," it said further.