Reports have indicated that several other online gaming companies have received show cause notices and are planning to take similar legal action.
According to reports, Dream11, led by CEO and co-founder Harsh Jain, has taken legal action in response to a show cause notice issued by Directorate General of GST Intelligence (DGGI), accusing them of evading goods and services tax (GST).
The parent company, Dream Sports, filed a writ petition in the Bombay High Court to contest this notice, which alleges failure to pay the 28% GST on the nominal value of bets.
The alleged tax evasion by Dream11 is estimated to be around Rs 40,000 Crores.
Dream11 is a leading player in India's evolving gaming sector. The platform's valuation exceeds $8 billion. It also has user base of over 180 million individuals on its sports fantasy platform.
After Dream Sports writ petitio, several other online gaming companies, like Games 24x7 and Head Digital Works (A23), have also taken legal action in response.
The Economic Times reported that several gaming companies have received pre-show cause notices recently. demanding a total payment of over Rs 55,000 crore in goods and services tax (GST). Some of these companies have already initiated or are considering legal measures to address this issue.
The significant impact of this tax demand on the online gaming sector has been a major concern of entities in the industry since it was introduced.
Legal discussions within gaming companies indicate that their primary focus is on contesting the retrospective application of GST on their revenues, dating back to July when the GST Council decided to impose a 28 percent tax on the full-face value, as reported by ET on September 27.