Dream11 faces India's largest-ever indirect tax notice

Online gaming giant Dream11 has found itself at the center of a historic indirect tax controversy in India. The company's parent entity, Dream Sports (Sporta Technologies Private Limited), recently received what is being deemed the largest ever indirect tax notice in the country's history. The show cause notice, issued by tax authorities, alleges GST evasion and failure to pay the required 28 percent GST on the face value of bets.

Moneycontrol reported that the tax demand stands at a staggering Rs 40,000 crore, while ET estimated it at Rs 25,000 crore. This development follows the Supreme Court's decision to stay a Karnataka High Court judgment, which has led to similar notices for more than 40 skill-gaming companies.

Dream11, known for its prominence in the fantasy sports arena, posted a net profit of Rs 142 crore in FY22, with operating revenue reaching Rs 3,841 crore. The controversy arises from the GST Council's decision in July 2023 to impose a uniform 28 percent GST on the full face value of skill-based games, irrespective of their skill or chance elements.

Previously, skill gaming platforms were subject to an 18 percent GST on their platform fees, known as Gross Gaming Revenue .The matter is now set for re-examination by the Supreme Court in the coming weeks, and experts warn that an adverse ruling could have profound implications for the beleaguered skill-based gaming industry already grappling with the weight of the new GST regime.