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Dream11 Receives Biggest Tax Notice In History, Files Petition In Bombay High Court

image-ln0cups6Dream11 receives biggest indirect tax notice in history.  [PC: X]

The Directorate General of GST Intelligence (DGGI), on Monday, has issued pre-show cause notices to around 12 online real money gaming companies over their tax dues worth Rs 55,000 crore. India’s largest fantasy gaming company, Dream11 has reportedly received the largest tax notice for dues worth INR 25,000 crores.

According to the report, the total quantum of all the notices may become double and this can further push Dream11’s numbers to around a massive total of INR 40,000 crores. The notice accuses Dream11 of evading goods and services tax and failing to pay the 28% GST on the nominal value of bets.

If the report is confirmed, this would result in the largest ever claim in the history of indirect taxation in India. Previously, in 2022, a Rs 21,000 crores tax notice was issued to a Bengaluru-based gaming company, Gameskraft. However, in response, Gameskraft took the matter to Karnataka High Court, which later on dismissed the notice.

Now, Dream11 which holds the top position in the Indian fantasy gaming industry, both in terms of number of users and valuation, has seemingly decided to follow the same legal procedure as Gameskraft last year. Dream Sports, the parent company of Dream11 (Sporta Technologies Pvt Ltd), has filed a writ petition in the Bombay High Court as a response to the show cause notice from tax authorities.

Earlier this year, the fantasy gaming industry was already shaken when the GST Council decided to impose a 28% GST rate on the entire nominal value for fantasy gaming transactions. Furthermore, after the Karnataka High Court dismissed the notice issued to Gameskraft, the revenue department challenged the court’s decision.

As a result, the Supreme Court had to come in to look after the matter as they decided to hear later this month or early next. The decision of the Supreme Court on this matter will have a big impact on the online gaming industry and its future.