Nazara Technologies tanks over 7% on GST notice worth ₹1,120 crore to subsidiaries

Nazara Tech shares opened sharply lower at ₹860.10 per share, down by 6.76% from the previous close on the NSE. In morning trade, they further dropped up to 7.3% to an intraday low of ₹855 apiece on the NSE.

The stock later recovered some ground but was trading 1.2% lower at ₹915 apiece at 12:15 pm. More than 6 lakh shares of the company changed hands on the bourse.

Nazara Tech informed stock exchanges in a filing that its two subsidiaries have received GST tax demand notices worth ₹1,120 crore.

Nazara Technologies subsidiary Openplay Technologies Pvt Ltd has received a show cause notice on July 16, 2024 from the Director General of GST Intelligence, Kolkata, for a proposed liability of ₹845.72 crore for the period from 2017-18 to 2022-23.

The notice has been issued under Section 74(1) of the CGST Act, 2017, and the State SGST Act, 2017, the company said.

Another subsidiary Halaplay Technologies Pvt Ltd has received a notice for a proposed tax liability under the CGST Act, 2017, amounting to ₹274.21 crore from the Director General of GST Intelligence, Kolkata, for the same period.

“These claims are in relation to the calculation of GST based on the sums pooled by players as opposed to gross gaming revenues,” Nazara Tech said in the filing.

The GST Council has clarified that 28% GST would be levied on the full value of bets placed on online gaming platforms.

The company said that both its subsidiaries are reviewing the notices with their legal counsels and tax advisors to determine the future course of action.

The two subsidiaries contributed to less than 2% of the company’s revenues and less than 1% of the profit for the quarter ended on March 31, 2024.