After Gameskraft, Dream11 has now become the latest RMG company to receive a show cause notice from tax authorities for GST evasion. Based on various reports, this fantasy sports platform had received a GST evasion notice amounting to anything between Rs 18,000 crores and 40,000 crores. Dream11’s parent company Dream Sports has reportedly approached the Bombay High Court challenging the notice.
Recently, the Indian tax officials have decided to investigate RMG companies for potential tax evasions, and are likely to send GST notices to at least 40 online gaming firms.
The notice issued by DGGI (Directorate General of GST Intelligence) to Mumbai-based Dream11 alleges that the latter failed to pay a 28 per cent GST on the face value of its bets, as per a Moneycontrol report. The report states that Dream11 posted a net profit of Rs 142 crore on operating revenue of Rs 3,841 crore in FY22.
As per an Economic Times report, Play Games24x7 and its affiliates My11Circle and RummyCircle have been served a notice seeking GST dues of Rs 20,000 crore while Hyderabad-based Head Digital Works has been served with a pre-show cause notice of over Rs 5,000 crore.
Play Games24x7 is the publisher of fantasy sports platform My11Circle, and online gaming platform RummyCircle. Head Digital Works runs real money games like poker and rummy on its platform A23.
The Indian online gaming industry has been facing challenging times. The notices by India’s tax authorities follow the GST council’s decision to levy a 28 per cent tax on the full value of bets placed on online games. Media reports suggest that more notices to RMG companies are expected in the coming weeks, with the total GST demand raised by the tax officials amounting to about Rs 100,000 crores.