Shares of Nazara Technologies shares slumped 5% on 18 July after two subsidiaries of the company, Openplay Technologies and Halaplay Technologies, faced GST liability notices totalling around 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. 

According to the company, the claims relate to the calculation of GST based on sums pooled by players rather than gross gaming revenues. Nazara Tech stated that both subsidiaries are currently consulting with legal and tax advisors to determine their next steps.

The company, in its regulatory filing, added, “We wish to inform you of the following developments related to ongoing GST matters of the gaming industry on behalf of our subsidiaries.”

During the January-March quarter, both of these subsidiary companies collectively contributed less than 2% of the company’s revenue and less than 1% of its profit. 
 
It is worth mentioning that the GST Council in August 2023 had clarified that a 28% 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 totalling over Rs 1.12 lakh crore during FY23 and FY24. Many of these companies have contested the notices, and the cases are still pending.

However, at 3:30 pm, the shares of Nazara Technologies closed 0.76% higher at Rs 929.60 on NSE.