Delta Corp, Nazara Tech shares fall up to 17 pc after SC backs GST levy
Mumbai, May 29
Shares of gaming companies came under heavy selling pressure on Friday after the Supreme Court upheld the government's retrospective imposition of 28 per cent Goods and Services Tax on online gaming platforms.
Delta Corp -- that operates licensed casinos and luxury hotels -- shares declined as much as 17.76 per cent to hit an intraday low of Rs 66.60 on the BSE from the previous close.
Meanwhile, Nazara Technologies -- a diversified gaming and sports media platform -- shares traded 5.07 per cent lower at Rs 274.80, hitting an intraday low on the exchange.
The verdict is expected to have significant financial implications for online gaming companies, which have been engaged in a prolonged legal battle over the tax treatment of online gaming activities.
The Supreme Court ruled that online gaming platforms cannot be treated merely as intermediaries and held that such activities create actionable claims under GST law. The apex court further observed that legislative amendments validating the tax levy were clarificatory in nature and therefore applicable retrospectively.
Following the ruling, shares of gaming-related companies witnessed sharp declines as investors assessed the potential impact of higher tax liabilities and regulatory uncertainty on the sector.
The dispute dates back to September 2023, when the Supreme Court stayed a Karnataka High Court order that had quashed a Directorate General of GST Intelligence (DGGI) notice seeking nearly Rs 21,000 crore in GST from Gameskraft.
The tax notice alleged that the company promoted online betting activities through platforms including Rummy Culture, Gamezy and Rummy Time.
Gaming companies had argued that online gaming operators merely function as intermediaries facilitating contests and do not supply actionable claims to players, making retrospective GST demands unsustainable.
However, tax authorities maintained that online gaming platforms effectively operate within betting and gambling frameworks, making player stakes taxable under the highest GST slab.
According to court submissions, cumulative tax demands raised through show-cause notices against online gaming companies amount to nearly Rs 91,684.81 crore. Including casinos, the total tax demand rises to around Rs 1.08 lakh crore.
The government had amended GST laws in August 2023 and made it mandatory for overseas online gaming companies to register in India from October 1, 2023.
— IANS
Reader Comments
Honestly, I'm not surprised. These online gaming platforms are basically glorified betting apps. They lure people with promises of easy money and then people lose life savings. 28% GST is high but maybe it will discourage some from wasting money on these games? The Supreme Court was right to call them out. India needs stronger regulation here.
Market is just reacting emotionally as usual. Delta Corp down 17% in one day is brutal, but Nazara only 5% which suggests some resilience. The legal clarity was actually needed - now companies know the rules and can plan accordingly. Restrospective tax is problematic but the govt has been doing this across sectors. Smart investors will see this as a buying opportunity if the companies survive the tax liability.
I'm from the US and this level of government intervention is shocking to see. 28% GST on gaming is already high compared to most countries, but retrospective taxes create total uncertainty for businesses. How can any company invest in India's gaming sector now? The government seems to be saying "we'll change the rules after you've already played." Not good for the startup ecosystem.
Ek baat toh clear hai - gambling aur skill-based gaming mein farak hai. Rummy, poker, fantasy sports - inme skill factor hota hai. Supreme Court ne Gameskraft ko booking ka medium bata diya, jo ki galat precedent ho sakta hai for genuine gaming startups. 91,000 crore ka demand unrealistic hai. Government should differentiate between games of skill and games of chance instead of putting everything under 28%.
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