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Nazara Technologies has confirmed that it received a show cause notice from the Director General of GST Intelligence (DGGI), Mumbai, demanding a tax payment of Rs 2.83 crore, inclusive of interest and penalties. This development makes Nazara Technologies the latest addition to a list of companies that have recently received similar notices, including Dream11, Games24x7, Gameskraft, and Delta Corp.
However, it’s important to note that this tax demand is distinct from the prevailing issue of retrospective taxation that is currently affecting India’s real-money gaming sector. Nazara Technologies has not yet provided further details about the notice.
In a filing with the stock market, Nazara Technologies confirmed its intention to respond to the show cause notice within the stipulated timeframes.
According to the notice, Nazara Technologies exported services under a letter of undertaking without paying the Goods and Services Tax (GST), as per Rule 96A of the Central Goods and Services Tax Rules, 2017. The show cause notice asserts that since the export proceeds have not been received due to a force majeure event, it does not comply with Section 2(6)(iv), and consequently, the sale of services cannot be treated as the export of services. As a result, the company is deemed responsible for paying the Integrated GST (IGST) at a rate of 18% on the value of such services.
Nazara Technologies clarified in its filing that the delay in receiving the proceeds from the export of services is due to unforeseen events beyond the company’s control. Despite the delay, there is no indication to suggest that the company will not eventually receive the entire export proceeds.
The company’s response to the show cause notice will shed more light on the specific details and its plans for addressing the tax demand.
Sources By Agencies
