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Nazara Technologies' subsidiaries, Openplay Technologies and Halaplay Technologies received show cause notices totaling ₹1,120 crore for GST discrepancies. Collectively, these subsidiaries contributed less than 2% of revenues and 1% of profit of Nazara Technologies in Q1 2024.
Nazara Technologies, a prominent player in online gaming and sports, disclosed that its subsidiaries, Openplay Technologies and Halaplay Technologies, have received show-cause notices from the Director General of GST Intelligence, Kolkata. The notices, issued on July 16, propose a combined liability of ₹1,120 crore under Goods and Services Tax (GST).
According to Nazara's exchange filing, Openplay Technologies faces a proposed liability of ₹845.72 crore, while Halaplay Technologies is confronted with ₹274.21 crore. These claims pertain to the calculation of GST based on pooled sums by players rather than gross gaming revenues, as detailed in the company's response to the notices.
Nazara Technologies stated that both subsidiaries are currently evaluating the show cause notices in collaboration with their legal counsels and tax advisors. They aim to assess the implications thoroughly and determine the appropriate course of action moving forward.
During the quarter ended March 2024, both subsidiaries collectively accounted for less than 2% of Nazara Technologies' total revenues and less than 1% of its profit, underscoring their relatively minor financial contribution to the company's operations.
Explore: Nazara Technologies Ltd Share Price
On Tuesday, Nazara Technologies share price closed at ₹923.20 on the NSE, reflecting a rise of ₹16.65 or 1.84% from the previous day's closing price. The stock remains in focus today after Wednesday’s close on account of Muharram.
The issuance of substantial GST show cause notices to Nazara Technologies' subsidiaries highlights a significant regulatory challenge in the online gaming sector. As the company navigates this issue, its response and strategic decisions will be crucial in mitigating financial impact and maintaining stakeholder confidence amidst ongoing legal proceedings.
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