Nazara’s subsidiaries receive Rs 1,120 Cr GST notice

Openplay Technologies and Halaplay Technologies, the two subsidiaries of listed gaming firm Nazara Technologies, have received notice from the Goods and Services (GST) department to pay nearly Rs 1,120 crore in retrospective taxes for the period of FY18 to FY23.

Openplay has a proposed liability of Rs 845.72 crore whereas Halaplay has been asked to pay Rs 274.21 crore, Nazara disclosed through a stock exchange filing on Wednesday.

As per Nazara, these claims are in relation to calculation of GST based on the sums pooled by players as opposed to gross gaming revenues. 

“Both subsidiaries are reviewing the notices with their legal counsels and tax advisors to determine their future course of action,” added Nazara.

Nazara acquired 100% stake in Hyderabad-based skill gaming company OpenPlay for Rs 186.4 crore in August 2021 while it took over Halaplay through multiple investment tranches.

Nazara also said that these subsidiaries collectively contributed to less than 2% of its revenues and less than 1% of its profit for the quarter ended in March 2024. In Q1 FY25, Nazara posted Rs 254.43 crore in total revenue with a profit of Rs 17.8 crore.

Nazara’s revenue from operations increased 4.3% to Rs 1,138 crore in FY24 from Rs 1,091 crore in FY23. Despite the flat scale, the controlled cost and spike in other income helped Nazara post a 23% growth in its profit to Rs 75 crore in FY24 from Rs 61 crore in FY23.

In October last year, the government introduced 28% GST on real money gaming companies which saw huge protest from the gaming firms including Nazara. The notices sent to Openplay Technologies and Halaplay Technologies by GST is not a new thing. 

Gaming companies such as Gameskreaft, Dream11, Probo and MPL also received such notices. Bengaluru-based Gameskraft, EGF and Play Games24x7 also challenged the retrospective tax in the Supreme Court but the apex court transferred 27 writ petitions pending in 11 high courts across the country. According to media reports, the government is also mulling to ease retrospective taxation in the real money gaming segment.