Delta Corp, India’s leading casino chain, has received communication from the Directorate General of GST Intelligence in Hyderabad, notifying them of a tax liability amounting to Rs 11,139 crore for the period between July 2017 and March 2022, inclusive of interest and penalty. In addition to this, other notices of Rs.5,682 crores have been raised against 3 of its subsidiaries. In response to this, the company stated in a stock exchange filing that if the dues are not settled, a show-cause notice will be issued.
This tax demand signifies the government’s consistent stance that a 28% GST applies to online gaming and casinos, calculated on the full-face value of bets or actionable claims. The GST Council reaffirmed this decision on August 2, specifying that the 28% tax rate is to be applied uniformly, irrespective of whether the games are based on skill or chance.
The demand on Delta Corp is one of the highest tax claims on an e-gaming company by the GST department, following the precedent set with the demand of Rs 21,000 crore from Gameskraft in September 2022. Delta Corp has asserted its intention to pursue all available legal options to challenge what it views as an arbitrary and unlawful tax demand.
This development has repercussions for the online gaming industry, prompting a dispute between industry stakeholders and the revenue department regarding the retrospective application of GST to the sector prior to the specified effective date of October 1. The anticipation of a 28% uniform tax on online gaming, as indicated by the GST Council in July, led to a decline in stock values for companies like Nazara Tech and Delta.
Follow the Link to access the CBIC Notification45/2023 Dated. 6 Sept 2023 relating to recent amendments on taxation of online gaming companies–https://taxinformation.cbic.gov.in/view-pdf/1009850/ENG/Notifications
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