The online fantasy gaming application Dream11’s, parent Dream Sports has filed a writ petition in the Bombay High Court, challenging the show cause notice issued by tax authorities for alleged violation of goods and services tax (GST) evasion and failure to pay 28 per cent GST on the total value of bets.
Dream11 has over 180 million users on its sports fantasy platform and is valued at over USD 8 billion. It reported a net profit of Rs 142 crore in the financial year 2022 (FY22) and an operating revenue of Rs 3,840.7 crore.
The Dream11 tax row comes at a time when real-money gaming companies are under pressure after the Supreme Court Order earlier this month which stayed the Karnataka HC’s ruling to quash GST notice against the Gameskraf online gaming company for alleged tax evasion of amount Rs 21,000 crore.
The Directorate General of GST Intelligence (DGGI) has issued a show-cause notice to Gameskraft the previous year, for indirect tax evasion on a betting amount between FY 2017 and FY 2022, which the Karnataka HC quashed.
The SC ruling has paved the way for the tax authorities to send similar show-cause notices to 40 gaming companies, including Dream11.
Earlier this year GST Council decided to impose 28 per cent GST on the total value of bets in gaming has caused many sharp reactions from the gaming industry.
Earlier this month, unicorn online gaming company Mobile Premier League (MPL) has laid off 350 employees nearly 50 per cent of its workforce.
Other firms such as crypto gaming platform One World Nation, real-money gaming app Fantok, and gaming start-up Quizy have temporarily shut down their operations.
The online skill gaming sector, valued at USD 20 billion Industry, earns USD 2.5 billion in revenue and contributes USD 1 billion in annual taxes, Is likely to grow by a 30 per cent compound annual growth rate (CAGR) and is set to grow by USD 5 billion in revenue by 2025, according to industry estimates.
India’s gaming industry received USD 575 million in investments between 2014 and 2020.