The Goods and Services (GST) department has sent notice to Openplay Technologies and Halaplay Technologies, the two subsidiaries of listed gaming company Nazara Technologies, requiring them to pay nearly Rs 1,120 crore in retroactive taxes for the fiscal years 2018 through 2023.
According to Nazara’s stock exchange filing on Wednesday, Openplay has a proposed liability of Rs 845.72 crore and Halaplay has been asked to pay Rs 274.21 crore.
According to Nazara, these allegations have to do with how GST is calculated using player pooled amounts rather than gross gaming revenues.
“Both subsidiaries are reviewing the notices with their legal counsels and tax advisors to determine their future course of action,” added Nazara.
In August 2021, Nazara paid Rs 186.4 crore for a 100% share in the Hyderabad-based skill gaming startup OpenPlay, while it used several investment rounds to take over Halaplay.
Additionally, Nazara stated that for the quarter that concluded in March 2024, these subsidiaries combined accounted for less than 2% of its sales and less than 1% of its profit. Nazara reported total revenue of Rs 254.43 crore and profit of Rs 17.8 crore for the first quarter of FY25.
From Rs 1,091 crore in FY23 to Rs 1,138 crore in FY24, Nazara’s operating revenue climbed by 4.3%. Despite the flat scale, Nazara’s profit increased by 23% to Rs 75 crore in FY24 from Rs 61 crore in FY23 thanks to controlled costs and a surge in other income.
The government imposed a 28% GST on real money gaming companies in October of last year, which sparked strong opposition from the industry, including Nazara. It is not new that Openplay Technologies and Halaplay Technologies received notices from GST.
These notifications were also sent to gaming companies like Dream11, MPL, Probo, and Gameskreaft. The retroactive tax was also contested in court by Gameskraft, EGF, and Play Games24x7, all of Bengaluru, but the Supreme Court moved 27 writ cases that were pending in 11 high courts around the nation. The government is reportedly considering easing retroactive taxes in the real money gaming industry.
