Shares of Nazara Technologies plunged over 5 percent on July 18 as two of its subsidiaries — Openplay Technologies and Halaplay Technologies — are facing significant GST liability notices totaling nearly Rs 1,120 crore.
Openplay Technologies has been issued a show cause notice by the Director General of GST Intelligence, Kolkata, for a proposed liability of Rs 845.72 crore. While Halaplay Technologies faces a liability of Rs 274.21 crore.
These notices pertain to the period from 2017-18 to 2022-23, Nazara Tech informed in a regulatory filing.
The claims relate to the calculation of GST based on sums pooled by players rather than gross gaming revenues, according to the company. Nazara Tech stated that both subsidiaries are currently consulting with legal and tax advisors to determine their next steps.
"We wish to inform you of the following developments related to ongoing GST matters of the gaming industry on behalf of our subsidiaries," the company said in the exchange filing.
For the quarter ended March 2024, these subsidiaries collectively contributed to less than 2 percent of Nazara Tech's revenues and less than 1 percent of its profit," Nazara said.
At 9:26 am, Nazara Tech shares were trading 4.8 percent lower at Rs 880 on the National Stock Exchange (NSE). So far this year, the stock has risen around 2 percent, underperforming benchmark Nifty which has risen nearly 13 percent during this period.
In the last year, however, the stock's 31 percent returns have beaten Nifty's returns of 24 percent.
It is worth mentioning that the GST Council in August clarified that a 28 percent tax would be levied on the full value of bets placed on online gaming platforms.
Last year, GST officers issued around 71 show-cause notices to online gaming companies for alleged GST evasion totaling over Rs 1.12 lakh crore during FY23 and FY24. Many of these companies have contested the notices, and the cases are still pending.
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