Nazara Technologies faces Rs 1,120 cr GST claim on subsidiaries

Indian gaming company Nazara Technologies faces a potential Rs 1,120 crore GST bill after its subsidiaries Openplay Technologies and Halaplay Technologies received notices from the GST department.

Openplay, acquired by Nazara in August 2021, is contesting a Rs 845.72 crore demand, while Halaplay, acquired through multiple tranches, faces a Rs 274.21 crore liability for the period from 2017-18 to 2022-23.

Both subsidiaries are challenging the GST calculation method, arguing it should be based on gross gaming revenue, not the player pool contribution.

Nazara also emphasizes that these subsidiaries are minor contributors, generating less than 2% of their revenue and 1% of their profit in the quarter ending March 2024.

In a move to expand its skill-based gaming portfolio, Nazara Technologies acquired Hyderabad-based OpenPlay Technologies in August 2021 for Rs 186.4 crore. OpenPlay operates a popular consumer gaming platform, “Classic Games,” featuring various skill-based games. This acquisition marked Nazara’s second venture into the real-money skill gaming space, following their 2019 purchase of Halaplay.

In 2023, the GST Council decided to levy a higher 28% GST rate on the full contest entry amounts for online gaming, casinos, and horse racing.

Last year as many as 71 show cause notices were issued to online gaming companies for alleged GST evasion of over Rs 1.12 lakh crore during financial years 2022-23 and 2023-24. YourStory